Product Differentiation, the Volume of Trade and Profits under Cournot and Bertrand Duopoly
This paper analyses how product differentiation affects the volume of trade under duopoly using Shubik-Levitan demand functions rather than the Bowley demand functions used by Bernhofen (2001). The Shubik-Levitan demand functions have the advantage that an increase in product differentiation does not increase the size of the market as happens with the Bowley demand functions. It is shown that the volume of trade in terms of quantities is decreasing in the degree of product differentiation when the trade cost is relatively low, but increasing in the degree of product differentiation when the trade cost is relatively high.
|Date of creation:||Nov 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Aberconway Building, Colum Drive, CARDIFF, CF10 3EU|
Phone: +44 (0) 29 20874417
Fax: +44 (0) 29 20874419
Web page: http://business.cardiff.ac.uk/research/academic-sections/economics/working-papers
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Collie, David R & Roger Clarke, 2003.
"Product Differentiation and the Gains from Trade under Bertrand Duopoly,"
Royal Economic Society Annual Conference 2003
47, Royal Economic Society.
- Roger Clarke & David Collie, 2003. "Product differentiation and the gains from trade under Bertrand duopoly," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 658-673, August.
- Dermot Leahy & J. Peter Neary, 2010.
"Oligopoly And Trade,"
Economics, Finance and Accounting Department Working Paper Series
n215-10.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
- Anderson, Simon P & Donsimoni, M-P & Gabszewicz, J J, 1989.
"Is International Trade Profitable to Oligopolistic Industries?,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(4), pages 725-33, November.
- ANDERSON, Simon P. & DONSIMONI, Marie-Paule & GABSZEWICZ, Jean J., . "Is international trade profitable to oligopolistic industries?," CORE Discussion Papers RP 865, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Donsimoni, M.-P. & Gabszewicz, J.J., 1986. "Is international trade profitable to oligopolistic industries ?," CORE Discussion Papers 1986027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- James Brander & Paul Krugman, 1982.
"A 'Reciprocal Dumping' Model of International Trade,"
513, Queen's University, Department of Economics.
- Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
- James Brander & Paul Krugman, 1980. "A "Reciprocal Dumping" Model of International Trade," Working Papers 405, Queen's University, Department of Economics.
- James A. Brander & Paul Krugman, 1983. "A 'Reciprocal Dumping' Model of International Trade," NBER Working Papers 1194, National Bureau of Economic Research, Inc.
- Daniel M. Bernhofen, 2001. "Product differentiation, competition, and international trade," Canadian Journal of Economics, Canadian Economics Association, vol. 34(4), pages 1010-1023, November.
- Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
- Harrigan, James, 1994. "Scale Economies and the Volume of Trade," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 321-28, May.
- Brander, James A., 1981.
"Intra-industry trade in identical commodities,"
Journal of International Economics,
Elsevier, vol. 11(1), pages 1-14, February.
- Schmitt, Nicolas & Yu, Zhihao, 2001. "Economies of scale and the volume of intra-industry trade," Economics Letters, Elsevier, vol. 74(1), pages 127-132, December.
- Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
- Piercarlo Zanchettin, 2006. "Differentiated Duopoly with Asymmetric Costs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 15(4), pages 999-1015, December.
When requesting a correction, please mention this item's handle: RePEc:cdf:wpaper:2011/26. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bruce Webb)
If references are entirely missing, you can add them using this form.