Reciprocal Dumping with Bertrand Competition

Arbeitspapier

This paper examines if international trade can reduce total welfare in an international oligopoly with differentiated goods. We show that welfare is a U-shaped function in the transport cost as long as trade occurs in equilibrium. With a Cournot duopoly trade can reduce welfare compared to autarchy for any degree of product differentiation. Under Bertrand competition we show that trade may reduce welfare compared to autarchy, if firms produce sufficiently close substitutes and the autarchy equilibrium is sufficiently competitive. Otherwise it can not.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IUI Working Paper ; No. 638

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Integration ; Oligopoly and Other Imperfect Markets
• Subject: Reciprocal Dumping ; Intra-Industry Trade ; Oligopoly ; Product Differentiation ; Transport Costs ; Intraindustrieller Handel ; Transportkosten ; Produktdifferenzierung ; Oligopol ; Dumping

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Friberg, Richard ; Ganslandt, Mattias
• Event: Veröffentlichung
• (who): The Research Institute of Industrial Economics (IUI)
• (where): Stockholm
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/81232
• Last update: 10.03.2025, 11:43 AM CET