According to Jones and Marjit (1992), in a two-sector, full-employment model it is not possible to show that growth in the foreign capital employed in the export sector of a small open economy will lead to a fall in the welfare in the presence of a protected import-competing sector. In this...

Microeconomic models posit that transaction costs isolate subsistence producers from output market shocks. We integrate microeconomic models of many heterogeneous households into a general equilibrium model and show that supply on subsistence farms may respond, in apparently perverse ways, to...

We develop a model with three key features: a factor market distortion, monopoly power in the product market and indivisibilities in consumption. In this setting, multiple equilibria arise, one with high and the other with low equilibrium wages, incomes and output. It is also shown that even in...

This paper argues that opening up an economy to trade can result in welfare reducing deindustrialization when agents are subject to credit constraints. The standard interpretation of such deindustrialization as a reallocation of resources across sectors with no aggregate long-term adverse...

This paper develops a model with three key features: a factor market distortion, monopoly power in the product market, and indivisibilities in consumption. We show that in this setting, there are multiple equilibria: one with high and the other with low equilibrium wages, incomes and output....

This paper develops a model with three key features: a factor market distortion, monopoly power in the product market, and indivisibilities in consumption. We show that in this setting, there are multiple equilibria: one with high and the other with low equilibrium wages, incomes and output....