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Network Effects and the Impact of Trade Liberalization

Author

Listed:
  • Toru Kikuchi

    (Kobe University)

  • Chiharu Kobayashi

    (Doshisha University)

Abstract

In this note, we examine how trade liberalization affects the profits of firms in the presence of network effects. We will show that, contrary to conclusions in the previous literature, trade liberalization between identical countries increases firms' profits despite intesified competition.

Suggested Citation

  • Toru Kikuchi & Chiharu Kobayashi, 2007. "Network Effects and the Impact of Trade Liberalization," Economics Bulletin, AccessEcon, vol. 6(4), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-06f10012
    as

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    File URL: http://www.accessecon.com/pubs/EB/2007/Volume6/EB-06F10012A.pdf
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    References listed on IDEAS

    as
    1. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    2. Anderson, Simon P & Donsimoni, M-P & Gabszewicz, J J, 1989. "Is International Trade Profitable to Oligopolistic Industries?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 725-733, November.
    3. Barrett, Christopher B. & Yang, Yi-Nung, 2001. "Rational incompatibility with international product standards," Journal of International Economics, Elsevier, vol. 54(1), pages 171-191, June.
    4. Gandal, Neil & Shy, Oz, 2001. "Standardization policy and international trade," Journal of International Economics, Elsevier, vol. 53(2), pages 363-383, April.
    5. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
    6. repec:ebl:ecbull:v:6:y:2005:i:7:p:1-9 is not listed on IDEAS
    7. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-440, June.
    8. Shy,Oz, 2001. "The Economics of Network Industries," Cambridge Books, Cambridge University Press, number 9780521805001, September.
    9. Eli M. Noam, 2001. "Interconnecting the Network of Networks," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262140721, April.
    10. Economides, Nicholas, 1996. "Network externalities, complementarities, and invitations to enter," European Journal of Political Economy, Elsevier, vol. 12(2), pages 211-233, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kangsik Choi & Ki‐Dong Lee, 2022. "Strategic delegation and network externalities under export rivalry market," Manchester School, University of Manchester, vol. 90(1), pages 1-19, January.

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    More about this item

    Keywords

    network effects;

    JEL classification:

    • F1 - International Economics - - Trade
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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