Citation

Discussion Paper Details

Please find the details for DP7764 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Hierarchical Trade

Author(s): Hans Gersbach and Hans Haller

Publication Date: March 2010

Keyword(s): control of trading platforms, Hierarchical trade and intermediate equilibria

Programme Area(s): Industrial Organization and International Trade and Regional Economics

Abstract: We study the allocation of commodities through a two-stage hierarchy of competitive markets. Groups or countries trade at global prices while individuals within a group trade at local prices. We identify the free trade and the autarky equilibrium as polar cases. We show that no other two-stage market equilibria exist if the commodity space is two-dimensional. An example demonstrates that other, so-called intermediate equilibria exist for three dimensional commodity spaces. We give two existence proofs for intermediate equilibria in higher dimensions. Each proof provides an explicit construction of special classes of intermediate equilibria. Finally, we consider the consequences for welfare and trade flows when some countries control the agency that organizes trade at the global level.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7764

Bibliographic Reference

Gersbach, H and Haller, H. 2010. 'Hierarchical Trade'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7764