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 profit levels) becomes smaller as more entrepreneurs switch to foreign brands.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 16141.
Date of creation: 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.
- 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.
- Toru Kikuchi, 2009. "A Simple Model of Foreign Brand Penetration under Monopolistic Competition," Discussion Papers 0910, Graduate School of Economics, Kobe University.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
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