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.

 

Framtidens arbetsförmedling

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Lars Calmfors, IFN, är en av redaktörerna för antologin Framtidens arbetsförmedling (Fores 2018): "Den största utmaningen idag i svensk ekonomi är den höga arbetslösheten bland utomeuropeiskt födda, personer som saknar gymnasiekompetens, äldre och personer med funktionsnedsättningar". Ett genomgående tema i boken är att det är bättre att genomföra förändringar i små steg som går att utvärdera än att i ett slag göra totala systemförändringar.

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