A 'Reciprocal Dumping' Model of International Trade
(131 K)
|
NBER Working Paper No. 1194
Issued in August 1983
NBER Program(s): ITI IFM
This paper develops a model in which the rivalry of oligopolistic firms serves as an independent cause of international trade. The model shows how such rivalry naturally gives rise to "dumping" of output in foreign markets, and shows that such dumping can be "reciprocal" -- that is, there may be two-way trade in the same product. Reciprocal dumpingis shown to be possible for fairly general specification of firm behaviour.The welfare effects of this seemingly pointless trade are ambiguous. On one hand, resources are wasted in the cross-handling of goods; on the other hand, increased competition reduces monopoly distortions. Surprisingly,in the case of free entry and Cournot behaviour reciprocal dumping is unanibiuously beneficial.
Published: Brander, James A. and Paul Krugman. "A 'Reciprocal Dumping' Model of International Trade." Journal of International Economics, Vol. 15, No. 3/4, (November 1983), pp. 313-321.
This paper is available as PDF (131 K) or via email.
Machine-readable bibliographic record -
MARC,
RIS,
BibTeX
|
|
|
About
Support
The research activities of the NBER are funded by grants from federal research agencies, by private foundations, and by generous donations from our corporate associates and from private individuals. The NBER is a non-profit, 501(c)(3) organization. For information on supporting the NBER, please contact:
Mr. Denis Healy, Director of Development
NBER
1050 Massachusetts Avenue
Cambridge, MA 02138-5398
ph: 617-868-3900
email: dhealy@nber.org
Close
