Trade liberalisation and the distribution of welfare gains under imperfect competition

This paper examines the effects on factor prices and welfare of partial trade liberalisation. The model is general equilibrium with two countries, two factors, and three sectors -- perfectly competitive, imperfectly competitive and trading resources. As trade is liberalised changes in factor prices and thus welfare may be non-monotonic even if the countries are identical. Differences across countries introduce Stolper-Samuelson considerations and affect the relative incentives for trade liberalisation across countries and factors.