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Network Externalities, Transport Costs and Tariffs

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  • Kenji Fujiwara

    ()
    (Kwansei Gakuin University)

Abstract

This paper 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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File URL: http://192.218.163.163/RePEc/pdf/kgdp53.pdf
File Function: First version, 2010
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Bibliographic Info

Paper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 53.

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Length: 15 pages
Date of creation: Apr 2010
Date of revision: Apr 2010
Handle: RePEc:kgu:wpaper:53

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Keywords: network externality; duopoly; transport costs; tariffs;

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