Endogenous Market Structure, Trade Cost Reduction, and Welfare
Marjit, Sugata; Mukherjee, Arijit
ARIJIT MUKHERJEE Arijit.Mukherjee@nottingham.ac.uk
Professor of Industrial Economics
We show the long-run effects of a trade cost reduction in an oligopolistic industry. If the labor markets are competitive and the products are homogeneous, a lower transportation cost affects neither consumer surplus nor welfare of the importing country under free entry of domestic firms. If the products are imperfect substitutes, a lower transportation cost may reduce consumer surplus and welfare of the importing country. We also show the implications of a domestic labor union, free entry of domestic and foreign firms, integer constraint, and a tariff as the trade cost.
|Journal Article Type||Article|
|Publication Date||Sep 1, 2015|
|Journal||Journal of Institutional and Theoretical Economics JITE|
|Peer Reviewed||Peer Reviewed|
|APA6 Citation||Marjit, S., & Mukherjee, A. (2015). Endogenous Market Structure, Trade Cost Reduction, and Welfare. Journal of Institutional and Theoretical Economics, 171(3), 493-511. doi:10.1628/093245615x14322754804672|
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