9. Consider a no-trade-to-free-trade liberalization with a pro-competitive effect and the expected theoretical market size and scale effects. However, industrial restructuring is prevented in the...

Extracted text: 9. Consider a no-trade-to-free-trade liberalization with a pro-competitive effect and the expected theoretical market size and scale effects. However, industrial restructuring is prevented in the short run, because all existing firms are bought by their national governments, which allows all the existing firms to continue operating. Draw the resulting equilibrium picture and illustrate the prices, the number of firms and total sales. What will be the impact on government revenues? What do you expect to happen in the long run, if some of these nations are bigger and richer than others?