Markups in a two-country monopolistic competition model of trade with heterogeneous consumers

Artikel

The paper develops a two-country monopolistic competition model of trade featuring country-specific consumer tastes. The accounting for heterogeneity in tastes is achieved by assuming different elasticities of substitution in the CES utility function for different country consumers. The proposed framework extends the canonical Krugman's approach by revealing new effects regarding markups response to consumer heterogeneity and trade liberalization. Specifically, the model predicts that, depending on the preference structure, trade liberalization may lead either to decrease or increase in the level of markups, charged by monopolistically competitive firms across destination countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Journal of Economic Structures ; ISSN: 2193-2409 ; Volume: 9 ; Year: 2020 ; Issue: 13 ; Pages: 1-12 ; Heidelberg: Springer

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Oligopoly and Other Imperfect Markets
• Subject: Heterogeneous consumers ; Monopolistic competition ; CES utility function ; International trade ; Markups

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Oésarin, Aleksandr ; Verbus, Valerij ; Bakunina, Irina ; Silaeva, Vera ; Silaeva, Marina
• Event: Veröffentlichung
• (who): Springer
• (where): Heidelberg
• (when): 2020

Further information

• DOI: doi:10.1186/s40008-020-0179-6
• Handle: http://hdl.handle.net/10419/261560
• Last update: 10.03.2025, 11:44 AM CET