Reciprocal Dumping with Bertrand Competition

Mattias Ganslandt () and Richard Friberg

No 5023, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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 autarky for any degree of product differentiation. Under Bertrand competition we show that trade may reduce welfare compared to autarky, if firms produce sufficiently close substitutes and the autarky equilibrium is sufficiently competitive. Otherwise it cannot.

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)
Date: 2005-04
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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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