We extend the Benassy (1996) 'taste for variety' model to an open economy setting. With the Benassy effect, the market equilibrium is inefficient, openness reduces the varieties provided in the unconstrained optimum and there are potential gains from international coordination.
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Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number
0508.
Length: Date of creation: Oct 2005 Date of revision: Handle: RePEc:ukc:ukcedp:0508
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Find related papers by JEL classification: 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
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