Trading Blocs and Market Performance under Duopolistic Competition
Trading Blocs and Market Performance under Duopolistic Competition
- 세종대학교 경제통합연구소
- Journal of Economic Integration
- 제20권 제2호
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2005.06294 - 317 (24 pages)
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This paper uses a three-country duopoly model to examine the effects of lowered trade barriers when a new entrant joins a trading bloc. There are two firms - a small-country firm and a large-country firm within the bloc - and three markets -two within and one (new entrant) outside the bloc. The results from trade bloc expansion vary for when marginal cost is falling with respect to output, but are clear when marginal cost is rising. In the latter case, profits improve more for the small-country firm than for the large-country firm. Consequences on prices, production, and trade are also considered.
Ⅰ. Introduction
Ⅱ. Assumptions for the Three-Country Duopoly Model
Ⅲ. Equilibrium Conditions
Ⅳ. Comparison of Quantities Produced and Sold, and Prices
Ⅴ. Effect of Change in Tariffs on Sales and Prices
Ⅵ. Effect of a Change in Tariffs on Profits and Consumer Surplus
Ⅶ. Conclusions
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