Discussion Papers 2016

CIRJE-F-1023

"Multiproduct Oligopoly and Trade Between Asymmetric Countries"

Author Name

Cheng, Yi-Ling and Takatoshi Tabuchi

Date

September 2016

Full Paper

PDF file

Remarks

Forthcoming in Review of International Economics.

Abstract

This paper develops a general equilibrium model of oligopolistic multiproduct …firms conducting trade between asymmetric countries, in which heterogeneous …firms entrants choose their product ranges and outputs. We show that there are fewer exporters in the larger country, and each produces a wider range of products but exports fewer varieties. We also show that while trade liberalization increases the total number of consumed varieties, it decreases the total number of …rms and may reduce the product range of each …firm.

Keywords: multiproduct firms, firm heterogeneity, cannibalization effect, product scope.