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Product differentiation and the gains from trade under Bertrand duopoly

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Author Info
Roger Clarke
David Collie

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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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File URL: http://economics.ca/cgi/xms?jab=v36n3/07.pdf
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Publisher 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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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies

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  1. Kikuchi, Toru, 2008. "Switching Costs and the foreign Firm's Entry," MPRA Paper 8093, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  2. 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. [Downloadable!]
  3. 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. [Downloadable!] (restricted)
  4. Friberg, Richard & Ganslandt, Mattias, 2005. "Reciprocal dumping with Bertrand competition," Working Paper Series in Economics and Finance 592, Stockholm School of Economics. [Downloadable!]
    Other versions:
  5. Clarke, Roger & Collie, David R., 2006. "Export Taxes under Bertrand Duopoly," Cardiff Economics Working Papers E2006/15, Cardiff University, Cardiff Business School, Economics Section. [Downloadable!]
    Other versions:
  6. Collie, David R. & Le, Vo Phuong Mai, 2008. "Anti-Dumping Regulations: Anti-Competitive and Anti-Export," Cardiff Economics Working Papers E2008/27, Cardiff University, Cardiff Business School, Economics Section. [Downloadable!]
  7. Arijit Mukherjee, 2007. "Entry in a Stackelberg perfect equilibrium," Economics Bulletin, Economics Bulletin, vol. 12(33), pages 1-6. [Downloadable!]
  8. 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. [Downloadable!] (restricted)
  9. Clarke, Roger & Collie, David R., 2006. "Maximum-Revenue versus Optimum-Welfare Export Taxes," Cardiff Economics Working Papers E2006/22, Cardiff University, Cardiff Business School, Economics Section. [Downloadable!]
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