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Market Integration and Market Concentration in Horizontally Differentiated Industries

Author

Listed:
  • Carsten Eckel

    () (University of Göttingen)

Abstract

This paper derives the impact of market integration on equilibrium firm size and market concentration in horizontally differentiated industries. We show that market concentration (measured by the number of firms) can rise as a consequence of market integration if firms engage in R&D competition. We also demonstrate that whether concentration occurs or not depends on the R&D production function and on consumer preferences. This result implies that the welfare effects of market integration are not unambiguously positive.

Suggested Citation

  • Carsten Eckel, 2005. "Market Integration and Market Concentration in Horizontally Differentiated Industries," Economics Bulletin, AccessEcon, vol. 6(16), pages 1-6.
  • Handle: RePEc:ebl:ecbull:eb-05f10009
    as

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    References listed on IDEAS

    as
    1. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    2. Lancaster, Kelvin, 1980. "Competition and Product Variety," The Journal of Business, University of Chicago Press, vol. 53(3), pages 79-103, July.
    3. 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.
    4. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, vol. 9(4), pages 469-479, November.
    5. Helpman, Elhanan, 1981. "International trade in the presence of product differentiation, economies of scale and monopolistic competition : A Chamberlin-Heckscher-Ohlin approach," Journal of International Economics, Elsevier, vol. 11(3), pages 305-340, August.
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    More about this item

    Keywords

    International Trade;

    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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