Reasons why oligopoly is difficult to handle in normal general equilibrium : Can the distribution of non-transferable quotas be justified in terms of common international fish stocks?

Article

In this paper, with trade in renewable resource goods such as fisheries in mind, we discuss why it is difficult to analyze oligopolistic analysis in the usual general equilibrium model, focusing on the case where each country uses the unit common price of a good in the international common market as an endogenous variable. In the original model, the supply-demand equilibrium, which is usually satisfied by an equality sign when the possibility of free goods is taken into account, has an inequality sign, but when the supply-demand equilibrium using the inequality sign with the equality sign is placed as a constraint, a necessary condition such as non-negativity is derived from the multiplier of the constraint. On the other hand, in trade, some countries export certain goods while others import them. If this is taken into account, the first-order necessary condition of the interior point solution for the unit price of the good as an endogenous variable will not be satisfied at the same time. This result is robust to the inclusion of country-specific components such as transportation costs and tariffs in an exogenous form. This result means that there is no endogenous equilibrium in general equilibrium (in partial equilibrium, there would have been a Cournot-Nash equilibrium), which is a precondition for negotiations to reduce the catch quotas for overfishing, etc. For example, countries that catch no fish and consume only resource goods may need to participate in the reduction negotiations. This means that a breakthrough measure, such as participation in negotiation for reduction, will be necessary for countries that catch no fish and consume only resource goods.