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Some aspects on regional integration, comparative advantage and consumer's diversity

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This article describes one simple Cournot oligopoly model with linear inverse demand and international linkage, and tries to analyse how the degree of competitiveness, the diversity in comparative advantage, consumer preference and market volume are closely interrelated with each other in the course of free trade areas (FTA) liberalization. The influence of income/substitution effects to firm's profit maximization is also examined. My analysis shows some basic results and implications regarding the tariff-setting strategies and the incentive for endogenous internal liberalization, as well as the role of FTA formation on a stream to world-wide liberalization.

Document Type: Research Article


Affiliations: Department of Economics, State University of New York at Buffalo, Buffalo, NY 14260, USA

Publication date: 2008-09-01

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