A Two-Way Trade Model without Reciprocal Dumping

Marie-Françoise Calmette

Economia Internazionale / International Economics, 2002, vol. 55, issue 3, 297-310

Abstract: In this paper, we focus on the opening of trade between two regulated monopolies and investigate the conditions leading to two-way trade in similar products. We assume segmented markets and positive costs of raising public funds in each country and we show that, under these hypothesis, two-way trade may occur. But we obtain different results from the ones stressed by Krugman and Brander in their “reciprocal dumping model”.Our first result is that such two- way trade occurs without reciprocal dumping. The second result is that two-way trade may be welfare improving in the low cost country but is always welfare reducing in the higher cost one.

JEL-codes: F15 L43 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ecoint:0179

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