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Integrated versus Segmented Markets: Implications for Export Pricing and Welfare

Author

Listed:
  • Raphael Becker
  • Sergey K. Nigai
  • Tobias Seidel

Abstract

This paper challenges the common assumption of market segmentation in international trade. To analyze export entry and pricing decisions of firms in integrated vs. segmented markets, we develop a novel tractable approach based on stochastic export costs that allows us to compare firm-level and aggregate outcomes under arbitrary market interdependence. We find that allowing for potential re-exporting arbitrage between countries imposes constraints on export prices of firms and has first-order implications for trade and welfare.

Suggested Citation

  • Raphael Becker & Sergey K. Nigai & Tobias Seidel, 2020. "Integrated versus Segmented Markets: Implications for Export Pricing and Welfare," CESifo Working Paper Series 8602, CESifo.
    • Handle: RePEc:ces:ceswps:_8602
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    market segmentation; pricing constraints; gains from trade;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration

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