A Simple Model of Foreign Brand Penetration under Monopolistic Competition

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A Simple Model of Foreign Brand Penetration under Monopolistic Competition

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Toru Kikuchi () (Graduate School of Economics, Kobe University)

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Toru Kikuchi

Abstract

The 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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Paper provided by Graduate School of Economics, Kobe University in its series Discussion Papers with number 0910.

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Length: 17pages
Date of creation: Jul 2009
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Handle: RePEc:koe:wpaper:0910

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Paper
- 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). [Downloadable!]
- Kikuchi, Toru, 2009. "A Simple Model of Foreign Brand Penetration under Monopolistic Competition," MPRA Paper 16141, University Library of Munich, Germany. [Downloadable!]

Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies

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)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
Other versions:
- Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Harvard Institute of Economic Research Working Papers 2118, Harvard - Institute of Economic Research. [Downloadable!]
- Helpman, Elhanan, 2006. "Trade, FDI and the Organization of Firms," CEPR Discussion Papers 5589, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," NBER Working Papers 12091, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Martin Richardson, 1998. "Foreign entry and domestic welfare," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 134(2), pages 250-262, June. [Downloadable!] (restricted)
Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
Other versions:
- Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics. [Downloadable!]
Marjit, Sugata & Beladi, Hamid & Kabiraj, Tarun, 2007. "Brand name collaboration and optimal tariff," Economic Modelling, Elsevier, vol. 24(4), pages 636-647, July. [Downloadable!] (restricted)
Ono, Yoshiyasu, 1990. "Foreign penetration and national welfare under oligopoly," Japan and the World Economy, Elsevier, vol. 2(2), pages 141-154, June. [Downloadable!] (restricted)
Kiminori Matsuyama, 1995. "Complementarities and Cumulative Processes in Models of Monopolistic Competition," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 701-729, June. [Downloadable!] (restricted)
Other versions:
- Kiminiori Matsuyama, 1994. "Complementaries and Cumulative Processes In Models of Monopolistic Competition," Discussion Papers 1106, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]

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