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Product differentiation and the gains from trade under Bertrand duopoly

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  • Roger Clarke
  • David Collie

Abstract

In the literature on the welfare effects of free trade under imperfect competition, one important case seems to have been overlooked, and that is the Bertrand duopoly model with differentiated products. Although many authors have analysed the welfare effects of free trade under Cournot duopoly and demonstrated the possibility of losses from trade, there has been no thorough analysis of the welfare effects of free trade under Bertrand duopoly. In this article we present a thorough analysis of the welfare effects of free trade under Bertrand duopoly with differentiated products, and it is shown that there are always gains from trade.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 36 (2003)
Issue (Month): 3 (August)
Pages: 658-673

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Handle: RePEc:cje:issued:v:36:y:2003:i:3:p:658-673

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Cited by:
  1. repec:ebl:ecbull:v:12:y:2007:i:33:p:1-6 is not listed on IDEAS
  2. Toru Kikuchi, 2009. "Switching Costs And The Foreign Firm'S Entry," Manchester School, University of Manchester, vol. 77(3), pages 366-372, 06.
  3. Clarke, Roger & Collie, David R., 2006. "Export Taxes under Bertrand Duopoly," Cardiff Economics Working Papers E2006/15, Cardiff University, Cardiff Business School, Economics Section.
  4. Takanori Ago & Ikumo Isono & Takatoshi Tabuchi, 2006. "Locational disadvantage of the hub," The Annals of Regional Science, Springer, vol. 40(4), pages 819-848, December.
  5. Peter Neary & Dermot Leahy, 2010. "Oligopoly and Trade," Economics Series Working Papers 517, University of Oxford, Department of Economics.
  6. Friberg, Richard & Ganslandt, Mattias, 2005. "Reciprocal Dumping with Bertrand Competition," Working Paper Series 638, Research Institute of Industrial Economics.
  7. repec:ebl:ecbull:v:6:y:2006:i:6:p:1-8 is not listed on IDEAS
  8. Collie, David R. & Le, Vo Phuong Mai, 2011. "Product Differentiation, the Volume of Trade and Profits under Cournot and Bertrand Duopoly," Cardiff Economics Working Papers E2011/26, Cardiff University, Cardiff Business School, Economics Section.
  9. David R. Collie & Vo Phuong Mai Le, 2010. "Antidumping Regulations: Anti-Competitive and Anti-Export," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 796-806, November.
  10. Friberg, Richard & Ganslandt, Mattias, 2006. "An empirical assessment of the welfare effects of reciprocal dumping," Journal of International Economics, Elsevier, vol. 70(1), pages 1-24, September.
  11. Collie, David R., 2009. "Tacit Collusion over Foreign Direct Investment under Oligopoly," Cardiff Economics Working Papers E2009/8, Cardiff University, Cardiff Business School, Economics Section.
  12. Fujiwara, Kenji, 2009. "Trade liberalization in a differentiated duopoly reconsidered," Research in Economics, Elsevier, vol. 63(3), pages 165-171, September.
  13. Leonard Wang & Ya-Chin Wang & Lihong Zhao, 2009. "Trade liberalization, intra-industry trade and the environment: competition mode and the order of firms’ moves," International Review of Economics, Springer, vol. 56(2), pages 133-144, June.
  14. Jan Bouckaert & Bruno De Borger, 2013. "Price competition between subsidized organizations," Journal of Economics, Springer, vol. 109(2), pages 117-145, June.
  15. Bouwe R. Dijkstra & Anuj J. Mathew & Arijit Mukherjeea, 2011. "Strict environmental policy: An incentive for FDI," Faculty Working Papers 08/11, School of Economics and Business Administration, University of Navarra.
  16. Arijit Mukherjee, 2007. "Entry in a Stackelberg perfect equilibrium," Economics Bulletin, AccessEcon, vol. 12(33), pages 1-6.

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