Network externalities, transport costs, and tariffs
AbstractThis article formulates a reciprocal market model of international duopoly with network externalities to reconsider welfare effects of reductions in transport costs and tariffs. Depending on the magnitude of network externalities, we show two possibilities. One of them, which emerges under strong network externalities, illustrates that freer trade unambiguously improves welfare for any initial level of trade barriers. This finding provides an affirmative evaluation of freer trade.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.
Volume (Year): 20 (2011)
Issue (Month): 6 (October)
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Web page: http://www.tandfonline.com/RJTE20
Other versions of this item:
- Kenji Fujiwara, 2010. "Network Externalities, Transport Costs and Tariffs," Discussion Paper Series 53, School of Economics, Kwansei Gakuin University, revised Apr 2010.
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