Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81232
Authors: 
Friberg, Richard
Ganslandt, Mattias
Year of Publication: 
2005
Series/Report no.: 
IUI Working Paper 638
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 autarchy for any degree of product differentiation. Under Bertrand competition we show that trade may reduce welfare compared to autarchy, if firms produce sufficiently close substitutes and the autarchy equilibrium is sufficiently competitive. Otherwise it can not.
Subjects: 
Reciprocal Dumping
Intra-Industry Trade
Oligopoly
Product Differentiation
Transport Costs
JEL: 
F12
F15
L13
Document Type: 
Working Paper

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