The Welfare Effect of International Cost Harmonization
Cost harmonization is said to occur when foreign firms' marginal costs are brought closer or equalized to domestic firms' costs. It can occur for various reasons, ranging from foreign direct investment to falling transport cost and policy changes in the foreign country. In this paper we derive general welfare effects of cost harmonization that can be induced by any of these changes. Assuming Cournot oligopoly, we identify a number of situations in which cost harmonization, whether induced by rising or falling marginal costs for foreign firms, can reduce domestic welfare. We then apply the results to various cases and evaluate policy implications.
|Date of creation:||Mar 2011|
|Date of revision:|
|Contact details of provider:|| Web page: http://economics.emory.edu/home/journals/|
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.:
- Anthony Creane & Kaz Miyagiwa, 2009.
"Foreign Direct Investment and the Welfare Effects of Cost Harmonization,"
0905, Department of Economics, Emory University (Atlanta).
- Anthony Creane & Kaz Miyagiwa, 2009. "Foreign Direct Investment and the Welfare Effects of Cost Harmonization," ISER Discussion Paper 0741, Institute of Social and Economic Research, Osaka University.
- Chor, Davin, 2009.
"Subsidies for FDI: Implications from a model with heterogeneous firms,"
Journal of International Economics,
Elsevier, vol. 78(1), pages 113-125, June.
- Davin Chor, 2007. "Subsides for FDI : Implications from a Model with Heterogeneous Firms," Finance Working Papers 22069, East Asian Bureau of Economic Research.
- Davin Chor, 2006. "Subsidies for FDI: Implications from a Model with Heterogenous Firms," 2006 Meeting Papers 475, Society for Economic Dynamics.
- Davin Chor, 2007. "Subsidies for FDI: Implications from a Model with Heterogeneous Firms," Working Papers 04-2007, Singapore Management University, School of Economics.
- Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
- James A. Brander & Barbara J. Spencer, 1983.
"Trade Warfare: Tariffs and Cartels,"
NBER Working Papers
1193, National Bureau of Economic Research, Inc.
- Markusen, James R., 2002.
"Multinational Firms and the Theory of International Trade,"
8380, University Library of Munich, Germany.
- James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, June.
When requesting a correction, please mention this item's handle: RePEc:emo:wp2003:1105. 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: (Sue Mialon)
If references are entirely missing, you can add them using this form.