ISSN:
1617-7134
Keywords:
vertical differentiation
;
strategic effects
;
intra-industry trade
;
skilled-unskilled wage premia
;
D4
;
J24
;
L13
;
L15
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract In a vertically differentiated Cournot oligopoly where the high-quality variant of the good requires the use of high-quality labor, firms may either all supply the same quality or differentiate their product. In differentiated configurations the number of firms choosing to supply the high-quality variant is generally above the optimum. The opening of trade between symmetric countries entails a pro-competitive effect that raises welfare through a reduction in average quality. This result contrasts with previous findings concerning the opening of trade in vertically differentiated oligopolistic industries (Gabszewicz, Shaked, Sutton, and Thisse,International Economic Review 22 [1981]; Shaked and Sutton, in Kierzkowski, ed.,Monopolistic Competition and International Trade, Oxford 1984).
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF01227448
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