Advertisement

Journal of Industry, Competition and Trade

, Volume 18, Issue 3, pp 295–302 | Cite as

The Cournot-Ricardo Solution under Domestic Free Movement of Labour

  • Alexandra M. Espinosa
Article
  • 77 Downloads

Abstract

This paper analyses the properties of the Cournot-Ricardo solution if workers have incentives to move from low to high profit industries. By construction, these movements contribute to the improvement of the competitiveness of countries with free movement of labour, due to the increase in size of industries with a comparative advantage. However, in general, it is not sufficient to guarantee convergence to the Ricardo-Mill solution. In conclusion, under the inter-industry movement of labour, economies are more competitive, but specialisation might not coincide with that predicted by the Ricardo-Mill model.

Keywords

Ricardo-Mill Ricardo-Cournot Intra-industry Labour mobility 

JEL Classification

C62 F11 F22 J61 

Notes

Acknowledgements

We would like to thank Silvia González for the valuable comments on the previous draughts. This research was supported by the Escuela Politécnica Nacional in Ecuador, research projects PIS-14-01 and PIS-16-18.

References

  1. Dixit A, Norman V (1980) Theory of international trade. Cambridge University Press, LondonCrossRefGoogle Scholar
  2. Dornbusch R, Fischer S, Samuelson P (1977) Comparative advantage: trade, and payments in a Ricardian model with a continuous goods. Am Econ Rev 67:823–839Google Scholar
  3. Ferreira P (2015) Market competition and executive pay. IZA World Labor 115:1–10.  https://doi.org/10.15185/izawol.115 Google Scholar
  4. Lindbeck A, Snower D (2002) The insider-outsider theory: a survey. IZA DP 534, IZA Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor, BonnGoogle Scholar
  5. Lowitzsch J, Hashi I, Woodward R (2009) The PEPPER IV report: Benchmarking of employee participation in profits and enterprise results in the member and candidate countries of the European Union. Tech. rep., Inter-University Centre at the Institute for Eastern European Studies, Free University of Berlin, BerlinGoogle Scholar
  6. Ruffin R (1974) International trade under uncertainty. J Int Econ 4:243–259CrossRefGoogle Scholar
  7. Song EY, Sohn CH (2012) Intra-industry trade and industry distribution of productivity: a Cournot-Ricardo approach. World Econ 35(4):461–482CrossRefGoogle Scholar
  8. Wilson C (1980) On the general structure of ricardian models with a continuum of goods. Applications to growth, tariff theory, and technical change. Econometrica 48(7):145–166CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Department of MathematicsEscuela Politécnica NacionalQuitoEcuador

Personalised recommendations