Market Integration and Market Concentration in Horizontally Differentiated Industries

Carsten Eckel

Economics Bulletin, 2005, vol. 6, issue 16, 1-6

Abstract: This paper derives the impact of market integration on equilibrium firm size and market concentration in horizontally differentiated industries. We show that market concentration (measured by the number of firms) can rise as a consequence of market integration if firms engage in R&D competition. We also demonstrate that whether concentration occurs or not depends on the R&D production function and on consumer preferences. This result implies that the welfare effects of market integration are not unambiguously positive.

Keywords: International; Trade (search for similar items in EconPapers)
JEL-codes: F1 L1 (search for similar items in EconPapers)
Date: 2005-09-07
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Working Paper: Market integration and market concentration in horizontally differentiated industries (2005)
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