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A decomposition of gains from trade in a differentiated oligopoly

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  • Fujiwara, Kenji

Abstract

Constructing a two-country oligopolistic model with product differentiation, this paper revisits welfare effects of free trade. The hybrid of procompetitive and variety expansion effects means that trade liberalization has definite benefits for the consumer, while it is contingent whether it is beneficial to oligopolistic firms and national welfare. We illustrate how these two effects interactively affect the possibility of gains from trade with simple diagrams.

Suggested Citation

  • Fujiwara, Kenji, 2008. "A decomposition of gains from trade in a differentiated oligopoly," Japan and the World Economy, Elsevier, vol. 20(3), pages 326-337, August.
    • Handle: RePEc:eee:japwor:v:20:y:2008:i:3:p:326-337
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    References listed on IDEAS

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    1. Sang-Seung, Yi, 1996. "Endogenous formation of customs unions under imperfect competition: open regionalism is good," Journal of International Economics, Elsevier, vol. 41(1-2), pages 153-177, August.
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    6. James R. MARKUSEN, 2021. "Trade And The Gains From Trade With Imperfect Competition," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 14, pages 303-323, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Monika Mrazova, 2009. "Trade negotiations when market access matters," Economics Series Working Papers 447, University of Oxford, Department of Economics.

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