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Article

Why are losses from trade unlikely?

Economics Letters. 2015. Vol. 129. P. 35-38.
Igor Bykadorov, Gorn A., Sergey Kokovin, Evgeny Zhelobodko.

Examining a standard monopolistic competition model with unspecified utility/cost functions, we find necessary and sufficient conditions on their elasticities for welfare losses from emerging trade or market expansion. Two numerical examples explain the losses: excessive or insufficient entry of firms can be aggravated by market enlargement (under unrealistic elasticities).