The situation prevailing in a market in which elements of monopoly allow individual producers or consumers to exercise some control over market prices.
- Thirdly, trade liberalization limits the market power of firms, and as a consequence, price distortions resulting from imperfect competition will decrease and efficiency will increase.
- But neoclassical economics can readily expand to models of imperfect competition that are perfectly capable of generating it.
- There are arguments for free trade even if trade flows respond more to imperfect competition than to comparative advantage.
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