Network Externalities, Transport Costs and Tariffs
AbstractThis 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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Bibliographic InfoPaper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 53.
Length: 15 pages
Date of creation: Apr 2010
Date of revision: Apr 2010
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network externality; duopoly; transport costs; tariffs;
Other versions of this item:
- Kenji Fujiwara, 2011. "Network externalities, transport costs, and tariffs," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(6), pages 729-739, October.
- NEP-ALL-2010-05-02 (All new papers)
- NEP-INT-2010-05-02 (International Trade)
- NEP-NET-2010-05-02 (Network Economics)
- NEP-URE-2010-05-02 (Urban & Real Estate Economics)
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