A Simple Model of Foreign Brand Penetration under Monopolistic Competition
AbstractThe main purpose of this study is to illustrate, with a simple monopolistic competition trade model, how trade liberalization (i.e., a decline in trade costs) can affect domestic entrepreneurs' decisions between domestic brands and foreign brands, and thus the degree of foreign brand penetration. It is shown that, as trade costs decrease, more entrepreneurs choose to provide foreign brands. However, the impact of trade liberalization (in terms of changes in profitt levels) becomes smaller as more entrepreneurs switch to foreign brands.
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Bibliographic InfoPaper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 0910.
Date of creation: Jul 2009
Date of revision:
Foreign brand penetration; trade liberalization; monopolistic competition;
Other versions of this item:
- Toru Kikuchi, 2010. "A simple model of foreign brand penetration under monopolistic competition," Journal of Economics, Springer, vol. 100(3), pages 235-245, July.
- Kikuchi, Toru, 2009. "A Simple Model of Foreign Brand Penetration under Monopolistic Competition," MPRA Paper 16141, University Library of Munich, Germany.
- Toru Kikuchi, 2009. "A Simple Model of Foreign Brand Penetration under Monopolistic Competition," EERI Research Paper Series EERI_RP_2009_14, Economics and Econometrics Research Institute (EERI), Brussels.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-17 (All new papers)
- NEP-COM-2009-07-17 (Industrial Competition)
- NEP-IND-2009-07-17 (Industrial Organization)
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