Macroeconomics & Markets

Student: Harutyunyan Elen

Faculty: International College of Economics and Finance

Educational Programme: Double degree programme in Economics of the NRU HSE and the University of London (Bachelor)

Final Grade: 7

Year of Graduation: 2019

I use General Equilibrium Increasing Returns to scale model (GE IRS) to show trade liberalization policy implications on prices, supplies and welfare. Trade occurs between two countries each producing a commodity with increasing returns to scale, firms follow Curnout behaviour where number of firms is given endogenously by the free-entry condition. My findings suggest that protectionist policy, which uses import tariffs and export subsidies to protect domestic firms induces inefficient entry of domestic firms which increases average costs and decreases amount of supply of each representative firm in home country. These results contrast with existing literature which employ the same types of models to analyze trade policy effects

Full text (added June 13, 2019)

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