Trade and Variety in a Model of Endogenous Product Differentiation
AbstractThis paper sets up a model of endogenous product differentiation to analyze the variety effects of international trade. In our model multi-product firms decide not only about the number of varieties they supply but also about the degree of horizontal differentiation between these varieties. Firms can raise the degree of differentiation by investing variety-specific fixed costs. In this setting, we analyze how trade integration, i.e. an increase in market size, influences the number of firms in the market, the number of product varieties supplied by each firm, and the degree of differentiation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 200902.
Length: 13 pages
Date of creation: 2009
Date of revision:
Publication status: Forthcoming in
Product differentiation; multi-product firms; international trade.;
Other versions of this item:
- Lorz Oliver & Wrede Matthias, 2009. "Trade and Variety in a Model of Endogenous Product Differentiation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 9(1), pages 1-14, November.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-24 (All new papers)
- NEP-COM-2009-01-24 (Industrial Competition)
- NEP-INT-2009-01-24 (International Trade)
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.:
- Stephen J Redding & Peter K Schott & Andrew B Bernard, 2007.
"Multi-product Firms and Trade Liberalization,"
2007 Meeting Papers
44, Society for Economic Dynamics.
- Andrew Bernard & Stephen Redding & Peter Schott, 2009. "Multi-Product Firms and Trade Liberalization," Working Papers 09-21, Center for Economic Studies, U.S. Census Bureau.
- Andrew B. Bernard & Stephen J. Redding & Peter K. Schott, 2006. "Multi-Product Firms and Trade Liberalization," NBER Working Papers 12782, National Bureau of Economic Research, Inc.
- Andrew B. Bernard & Stephen Redding & Peter K. Schott, 2006. "Multi-Product Firms and Trade Liberalization," CEP Discussion Papers dp0769, Centre for Economic Performance, LSE.
- Baldwin, John R. Gu, Wulong, 2006.
"The Impact of Trade on Plant Scale, Production-Run Length and Diversification,"
Economic Analysis (EA) Research Paper Series
2006038e, Statistics Canada, Analytical Studies Branch.
- John Baldwin & Wulong Gu, 2009. "The Impact of Trade on Plant Scale, Production-Run Length and Diversification," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 557-592 National Bureau of Economic Research, Inc.
- Brambilla, Irene, 2009.
"Multinationals, technology, and the introduction of varieties of goods,"
Journal of International Economics,
Elsevier, vol. 79(1), pages 89-101, September.
- Irene Brambilla, 2006. "Multinationals, Technology, and the Introduction of Varieties of Goods," NBER Working Papers 12217, National Bureau of Economic Research, Inc.
- Hélène ERKEL-ROUSSE, 1997. "Endogenous Differentiation Strategies, Comparative Advantage and the Volume of Trade," Annales d'Economie et de Statistique, ENSAE, issue 47, pages 121-149.
- Robert Feenstra & Hong Ma, 2007. "Optimal Choice of Product Scope for Multiproduct Firms under Monopolistic Competition," NBER Working Papers 13703, National Bureau of Economic Research, Inc.
- Marc J. Melitz & Gianmarco I. P. Ottaviano, 2008.
"Market Size, Trade, and Productivity,"
Review of Economic Studies,
Oxford University Press, vol. 75(1), pages 295-316.
- Ottaviano, Gianmarco & Melitz, Marc, 2008. "Market Size, Trade, and Productivity," Scholarly Articles 3229096, Harvard University Department of Economics.
- Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," Development Working Papers 201, Centro Studi Luca d\'Agliano, University of Milano.
- Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," NBER Working Papers 11393, National Bureau of Economic Research, Inc.
- Volker Nocke & Stephen Yeaple, 2006.
"Globalization and Endogenous Firm Scope,"
PIER Working Paper Archive
06-015, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Paul Allanson & Catia Montagna, 1999.
"Multiproduct Firms and Market Structure: An Explorative Application to the Product Life Cycle,"
Dundee Discussion Papers in Economics
101, Economic Studies, University of Dundee.
- Allanson, Paul & Montagna, Catia, 2005. "Multiproduct firms and market structure: An explorative application to the product life cycle," International Journal of Industrial Organization, Elsevier, vol. 23(7-8), pages 587-597, September.
- Carsten Eckel, 2006. "Trade and Diversity: Is There a Case for 'Cultural Protectionism?'," German Economic Review, Verein für Socialpolitik, vol. 7, pages 403-418, November.
- Carsten Eckel & J. Peter Neary, 2010.
"Multi-Product Firms and Flexible Manufacturing in the Global Economy,"
Review of Economic Studies,
Oxford University Press, vol. 77(1), pages 188-217.
- Peter Neary & Carsten Eckel, 2006. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Economics Series Working Papers 292, University of Oxford, Department of Economics.
- Eckel, Carsten & Neary, J Peter, 2006. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," CEPR Discussion Papers 5941, C.E.P.R. Discussion Papers.
- Carsten Eckel & J Peter Neary, 2006. "Multi-Product Firms and Flexible Manufacturing in the Global Economy," Working Papers 200608, School Of Economics, University College Dublin.
- Simon P. Anderson & André de Palma, 2003. "Market Performance With Multiproduct Firms," Virginia Economics Online Papers 357, University of Virginia, Department of Economics.
- Carsten Eckel, 2009. "Endogenous Sunk Costs, Flexible Manufacturing and the Productivity Effects of International Trade," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 369-386, 06.
- Ferguson, Shon, 2011.
"Endogenous Product Differentiation, Market Size and Prices,"
Working Paper Series
878, Research Institute of Industrial Economics.
- Ferguson, Shon, 2010. "Endogenous Product Differentiation, Market Size and Prices," Research Papers in Economics 2010:26, Stockholm University, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bernd Hayo).
If references are entirely missing, you can add them using this form.