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Welfare effects of common ownership in an international duopoly

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  • Yi Liu
  • Toshihiro Matsumura

Abstract

We formulate an international oligopoly model in the presence of global common ownership. We theoretically investigate how common ownership affects the volume of international trade in an oligopoly market and global welfare. We find that welfare decreases (increases) with the degree of common ownership when the international transport costs are low (high), whereas common ownership reduces international trade. This conclusion remains valid in the presence of import tariffs and asymmetric common ownership share. Effets sur le bien‐être de la propriété commune dans un duopole international. Nous formulons un modèle oligopolistique international où il y a une propriété commune mondiale. Nous étudions de façon théorique les effets de la propriété commune sur le volume du commerce international dans un marché oligopolistique et sur le bien‐être mondial. Nous constatons que le bien‐être diminue (augmente) selon le niveau de propriété commune lorsque les coûts de transport international sont faibles (élevés), alors que la propriété commune réduit le commerce international. Cette conclusion demeure valide lorsqu'il y a des droits de douane et une part asymétrique de la propriété commune.

Suggested Citation

  • Yi Liu & Toshihiro Matsumura, 2024. "Welfare effects of common ownership in an international duopoly," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 57(2), pages 459-477, May.
    • Handle: RePEc:wly:canjec:v:57:y:2024:i:2:p:459-477
    DOI: 10.1111/caje.12712
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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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