Policies and multinational enterprises under monopolistic competition e varying markup

• Grant number: 09/07636-2
• Support Opportunities: Regular Research Grants
• Start date: July 01, 2010
• End date: October 31, 2013
• Field of knowledge: Applied Social Sciences - Economics - International Economy
• Principal Investigator: Carlos Alberto Cinquetti
• Grantee: Carlos Alberto Cinquetti
• Host Institution: Faculdade de Ciências e Letras (FCL). Universidade Estadual Paulista (UNESP). Campus de Araraquara. Araraquara , SP, Brazil

Abstract

The latest trade models with monopolistic competition models, with firms heterogeneity, introduce the effect productive efficiency by means of plant selection. On the other hand, by keeping the Dixit-Stiglitz's consumer preferences, these models leave aside the rivalry in markup and thus the international competition effect. We attempt to resume the approach with varying markup (Helpman & Krugman, 1985: 6.3) aiming to gather both productive efficiency and international competition. In the trade-policy analysis, including transport-cost and market size, firms heterogeneity can be left aside, at a first stage, so that productive efficiency will be tied to firms entry - the scale effect. In an economy with multinational enterprises, without trade protection, but keeping the mentioned economic-geographic context, the heterogeneity of firms is present in the several types of multinationals (vertical and horizontal), beyond the domestic firms, likewise Markusen's (2002: cap. 7) knowledge-capital model. We could thus attain the scale effect stemming from variation in the world-market size, impossible with Dixit-Stiglitz. On account of the models' complexity, we apply numerical analysis of a general equilibrium, which allow more defined impact analyses, as well as graphical constructions accounting for several dimensions of these equilibria. (AU)