研討日期

201262310:30 ~ 13:00

研討地點

台大社會科學院26教室

討論題目

題目

作者

文獻出處

Do falling trade costs always benefit rich countries?

Yen-Ju Lin

Working Paper

報告人

林晏如

參加人員

林燕淑、梁文榮、吳芝文、王光正、張民忠、林晏如、蔡明芳、王佳琪、彭正浩、高國峯、陳金盛、張志偉、丁虹仁、鍾暳陵、呂得成、吳宜謙、黃品錚、許至乙、施姵全

摘要

The literature seems to have overlooked the welfare effects of economic integration (a fall in trade costs). Although many economists have analyzed the welfare effects of a reduction in trade costs and demonstrated a U-shaped relationship between welfare and trade costs under the Bertrand duopoly model with horizontal differentiated products in the case of symmetric countries, there has been no though analysis of the welfare effects of falling trade costs with vertical differentiated products when the two countries differ in income level. The purpose of this paper is to investigate the welfare effects in rich and poor countries when trade costs fall.

This paper employs it is reasonable to associate different qualities of the same good with a single industry and assign a central role to the income level of residents. In our paper we set up a model of a generalized oligopoly in the region with two countries of different income levels and analyze the welfare effects of falling trade costs with vertical differentiated products. In this setting we find that the relationship between welfare and trade costs is affected by the level of income disparity between two countries and the quality difference.

Economic integration (a fall in trade costs) may reduce welfare in the rich country, but increase welfare in the poor country.

Our model delivers two main results. First, we find that falling trade costs always benefit the rich country, but may hurt the poor country when the level of income disparity between the two countries is extremely small. This implies that welfare is not necessary U-shaped under Bertrand duopoly. Second, we show that a fall in trade costs is welfare-increasing for the poor country, while the welfare of the rich country declines in the initial stages of economic integration, but rises again as trade costs fall further when the level of income disparity between the two countries is extremely large. This indicates that, at some stages of economic integration, there may indeed be conflicting interests between rich and poor countries with respect to continuing the process of market integration.