Economic Integration, Quality Choice, and Monopoly

Tsuyoshi Toshimitsu

No 118, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: Applying a standard model of endogenous quality choice to the case of multiple national markets (i.e., a developed and a less developed country), we consider the effect of an economic integration (i.e., a movement from segmented markets into a single integrated market through the removal of trade barriers) on price, quality, and consumer surplus. We show that the effect depends on the difference between the consumer distributions of the two countries and the degree of trade barrier costs. In particular, if the difference between the consumer distributions of them is large (small) and/or the degree of trade barrier costs is low (high), an economic integration decreases (increases) the quality level and the welfare of the two countries.

Keywords: segmented market; integrated market; trade barrier costs; economic integration; price discrimination; uniform price; quality choice; demand dispersion; monopoly (search for similar items in EconPapers)
JEL-codes: D42 L12 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2014-05, Revised 2014-05
New Economics Papers: this item is included in nep-int
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:118

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