Trade Liberalization May Be Harmful under Endogenous Di¤erentiation1
نویسنده
چکیده
The consequences of free trade are investigated in an international duopoly under horizontal di¤erentiation and convex transportation costs. It is shown that the smaller country may bene...t from trade if it is su¢ciently small to allow for a signi...cant volume of exports by the domestic ...rm. On the contrary, the larger country never bene...ts from trade, since liberalization decreases the domestic ...rm’s pro...t more than it increases consumer surplus. JEL Classi...cation: F 12, F13, L 13
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Country asymmetries, endogenous product choice and the timing of trade liberalization
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