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Taste for Variety and Optimum Product Diversity in an Open Economy

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  • Javier Coto-Martinez
  • Maria del Carmen Garcia-Alonso

    ()

  • Paul Levine

Abstract

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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File URL: ftp://ftp.ukc.ac.uk/pub/ejr/RePEc/ukc/ukcedp/0508.pdf
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Bibliographic Info

Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0508.

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Date of creation: Oct 2005
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Handle: RePEc:ukc:ukcedp:0508

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
Fax: +44 (0)1227 827850
Web page: http://www.ukc.ac.uk/economics/

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Keywords: Taste for Variety; monopolistic competition; Benassy effect; open economy;

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  1. Flam, Harry & Helpman, Elhanan, 1987. "Industrial policy under monopolistic competition," Journal of International Economics, Elsevier, vol. 22(1-2), pages 79-102, February.
  2. Paul Dunne & Maria del Carmen Garcia-Alonso & Paul Levine & Ron Smith, 2005. "Military Procurement, Industry Structure and Regional Conflict," Studies in Economics 0502, Department of Economics, University of Kent.
  3. 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.
  4. Chari, V V & Kehoe, Patrick J, 1990. "International Coordination of Fiscal Policy in Limiting Economies," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 617-36, June.
  5. Benassy, Jean-Pascal, 1996. "Taste for variety and optimum production patterns in monopolistic competition," Economics Letters, Elsevier, vol. 52(1), pages 41-47, July.
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Cited by:
  1. Maria del Carmen Garcia-Alonso & Paul Levine, 2005. "Strategic Procurement, Openness and Market Structure," Studies in Economics 0503, Department of Economics, University of Kent.

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