Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30107
Authors: 
Lorz, Jens Oliver
Wrede, Matthias
Year of Publication: 
2009
Series/Report no.: 
Joint discussion paper series in economics 2009,02
Abstract: 
This paper sets up a model of endogenous product differentiation to analyze the variety effects of international trade. In our model multi-product firms decide not only about the number of varieties they supply but also about the degree of horizontal differentiation between these varieties. Firms can raise the degree of differentiation by investing variety-specific fixed costs. In this setting, we analyze how trade integration, i.e. an increase in market size, influences the number of firms in the market, the number of product varieties supplied by each firm, and the degree of differentiation.
Subjects: 
Product differentiation
multi-product firms
international trade.
JEL: 
D43
F12
L25
Document Type: 
Working Paper

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