An Empirical Assessment of the Welfare Effects of Reciprocal Dumping

Reprint No. 2006:12

Author(s): Richard Friberg and Mattias GanslandtYear: 2006 Title: Journal of International Economics Volume (No.): 70 (1) Pages: 1–24

Can two-way trade in similar products lead to lower welfare than if such trade was banned? Theory answers yes. To empirically investigate this proposition we examine Swedish imports of bottled water. Assuming one-shot (Bertrand and Coumot) competition, we can use the estimates from a structural model of demand to uncover marginal costs. We simulate the effect on consumer and producer surplus of banning imports. We do not find convincing evidence that banning imports would increase overall welfare. Given our choice of market this suggests we should not be overly concerned with the welfare effects of two-way trade in consumer goods that are close to homogenous.

Friberg, Richard and Mattias Ganslandt (2006), "An Empirical Assessment of the Welfare Effects of Reciprocal Dumping". Journal of International Economics 70(1), 1–24.

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Social Capital and Health

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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