Working Paper No. 599

Bottled Water – A Case of Pointless Trade?

Publicerad: June 24, 2003Antal sidor: 31Nyckelord: Reciprocal Dumping; Intra-Industry Trade; Nested Logit ModelsJEL-koder: F12; F14; L13; L66

Bottled Water – A Case of Pointless Trade? Richard Friberg and Mattias Ganslandt

Two-way trade in (almost) homogenous products has ambiguous welfare effects if entry is restricted. We examine Swedish imports of bottled water to investigate whether transport cost losses from trade outweigh the partial equilibrium gains from trade (stronger competition and more brands to choose from). Using monthly data for all brands sold in stores during 1998-2001 we estimate a structural model of demand. Assuming one-shot Bertrand competition by multibrand firms, we can use the estimated model to uncover marginal costs. We stimulate the effect on consumer and producer surplus of banning imports, finding the banning imports would decrease overall welfare. Expanded choice is the main benefit of trade and disregarding his the net welfare effect of imports in this market are approximately zero - the pro-competitive effect is of the same size as the cost savings associated with replacing foreign, higher cost, suppliers with domestic. 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.


Essäer om medborgarlön

Pengar för ingenting

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Andreas Bergh och Mårten Blix är medförfattare i antologin Pengar för ingenting (Timbro förlag 2018). Frågan som författarna försöker besvara är om medborgarlön är en nödvändig reform eller är det ett grundskott mot principen att välfärdsstaten vilar på en balans mellan rättigheter och skyldigheter.

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