ABSTRACT
In the so-called `new trade theory' it is customary to assume that, in each country, identical oligopolistic ®rms play a non-cooperative (Cournot±Nash or Bertrand±Nash) game. However, it has been argued recently that identical ®rms which know themselves to be identical will cooperate and behave like a single ®rm; see Kemp and Shimomura (1995). In particular, it has been argued that if all agents in an economy are identical and know themselves to be identical then they will cooperate to achieve an ef®cient allocation; see Kemp and Long (1992).
