This paper shows how firms, by bundling their products with nontradables, may contribute to the segmentation of international oligopoly markets. The authors develop a simple example with two products: one that is homogeneous across markets and one that is bundled with a nontradable, e.g., local services. Integration of the markets for the homogeneous product yields the expected price equalization across markets. However, integration of the markets for bundled products leaves the economy entirely unaffected. Hence, the standard methodology of comparing a 'segmented' and an 'integrated' equilibrium would exaggerate the effects of integration in this economy. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 37 (1996) Issue (Month): 1 (February) Pages: 51-69 Download reference. The following formats are available: HTML
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OTTAVIANO, Gianmarco & TABUCHI, Takatoshi & THISSE, Jacques-Franois, 1999.
"Agglomeration and trade revisited,"
CORE Discussion Papers
1999041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-FranÁois Thisse, 2002.
"Agglomeration and Trade Revisited,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 409-436, May.
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