Reciprocal dumping with Bertrand competition

Richard Friberg and Mattias Ganslandt ()

No 592, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: 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.

Keywords: Reciprocal dumping; intra-industry trade; oligopoly; product differentiation; transport costs (search for similar items in EconPapers)
JEL-codes: F12 F15 L13 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2005-03-23
New Economics Papers: this item is included in nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Reciprocal Dumping with Bertrand Competition (2005)
Working Paper: Reciprocal Dumping with Bertrand Competition (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0592

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