Reciprocal Dumping with Product Differentiation

Reprint No. 2008:25

Author(s): Richard Friberg and Mattias GanslandtYear: 2008 Title: Review of International Economics Volume (No.): 16 (5) Pages: 942–954

This paper examines if international trade can reduce total welfare in an international oligopoly with differentiated goods. We show that intra-industry trade, i.e. “reciprocal dumping,” can result in lower total surplus than autarky in a Cournot model for any degree of product differentiation. Moreover, trade can reduce welfare compared to autarky in a Bertrand model when the local markets are sufficiently competitive and products are sufficiently close substitutes. Otherwise it unambiguously increases welfare.

Friberg, Richard and Mattias Ganslandt (2008), "Reciprocal Dumping with Product Differentiation". Review of International Economics 16(5), 942–954.

Interdisciplinary European Studies

The European Union and the Return of the Nation State


This book explores the complex and ever-changing relationship between the European Union and its member states. The recent surge in tension in this relationship has been prompted by the actions of some member state governments as they question fundamental EU values and principles and refuse to implement common decisions seemingly on the basis of narrowly defined national interests.

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