研討日期
研討地點
台大社會科學院經濟系會議室
題目
Income,
Market Size, Product Differentiation, and International Trade
作者
李月宮
文獻出處
Working Paper
報告人
李月宮
參加人員
李月宮、黃鴻、陳宏易、吳芝文、林晏如、王光正、曾靜枝、陳金盛、張瑞雲、丁虹仁、周冰瑤、高國峰、彭正浩
摘要
(1)
The firms in two
identical countries can gain from multilateral trade provided that
products have an adequate degree of differentiation. Moreover, the firms
facing different demand magnitudes in two countries may also both gain
from free trade. These findings indicate that the firms face a higher
intensity of import competition under the Bertrand setting than under
the Cournot setting, and that free trade should find less resistance in
firms where products are sufficiently differentiated.
(2)
The demand magnitudes
between trading partners and product differentiation are crucial in
determining welfare gains from free trade under Cournot competition, but
unimportant under Bertrand competition. By comparison, the two countries
are always gaining welfare from free trade under Bertrand competition,
regardless of how large or small the demand magnitudes at two countries
and the degree of product differentiation.
(3)
In the case of Cournot
competition, an increase in the degree of product differentiation is
good news to both trading countries. In sharp contrast, in the case of
Bertrand competition, although an increase in the degree of product
differentiation adds to both countries’ welfare and the firms’ profit,
it proves bad news to the consumers in each country, because the ΔCS
is decreasing.
(4)
Both cases of Cournot
and Bertrand competition, the profit differential (Δπ)
of a country is an increasing function of income and market size of the
foreign country, but a decreasing function of those of the home country.
(5)
In the case of Cournot
competition and under γ
< 2/3, we found that both countries gain from
bilateral free trade. On the other hand, under 2/3< γ≦1,
a country’s welfare gain is an increasing (decreasing) function of
income and market size of the foreign (home) country, hence it increases
with an increase in income or market size.
(6)
If demand magnitudes
of trading partners are identical (i.e.
an =1), then we found that
the equilibrium welfare in each country under Cournot competition is
less than that under Bertrand competition with differentiated products.
But, under an≠1,
the equilibrium welfare of the home country under Cournot competition
will be greater than that under Bertrand competition provided that
> [
]. Hence, whether the equilibrium welfare is larger under
Bertrand than under Cournot competition depends on the magnitudes of
an and
γ. So that the well-known outcomes in the
literature that “Bertrand competition is more efficient than Cournot
competition” does not necessarily hold in the model with an asymmetric
demand.
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