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Network externalities, transport costs, and tariffs

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  • Kenji Fujiwara

Abstract

This article formulates a reciprocal market model of international duopoly with network externalities to reconsider welfare effects of reductions in transport costs and tariffs. Depending on the magnitude of network externalities, we show two possibilities. One of them, which emerges under strong network externalities, illustrates that freer trade unambiguously improves welfare for any initial level of trade barriers. This finding provides an affirmative evaluation of freer trade.

Suggested Citation

  • Kenji Fujiwara, 2011. "Network externalities, transport costs, and tariffs," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 20(6), pages 729-739, October.
  • Handle: RePEc:taf:jitecd:v:20:y:2011:i:6:p:729-739 DOI: 10.1080/09638190903452647
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    1. repec:ebl:ecbull:eb-17-00359 is not listed on IDEAS
    2. Anomita Ghosh & Rupayan Pal, 2014. "Strategic trade policy for network goods oligopolies," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2014-039, Indira Gandhi Institute of Development Research, Mumbai, India.

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