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AA00260492-19970002-0051.pdf
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Title |
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INTRAINDUSTRY TRADE UNDER VERTICAL PRODUCT DIFFERENTIATION
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LAMBERTINI, Luca
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Dipartimento di Scienze Economiche Universita degli Studi di Bologna, Institute of Economics University of Copenhagen
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Keio Economic Society, Keio University
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1997
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Keio economic studies
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34
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2
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1997
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51
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69
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The paper focuses on trade between two countries where a vertically differentiated commodity is produced by a single firm in each country, operating initially in autarkic conditions. It is assumed that the two countries have overlapping income distributions, giving thus rise, under certain conditions, to two-way trade, I.e., a proper intraindustry trade. It emerges that while consumers always benefit from trade, especially if two-way trade arises, firms may have conflicting preferences on the choice between (I) autarky and trade, as well as (ii) one-way trade and two-way trade.
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