Consumer Nationalism and Multilateral Trade Cooperation

23 Pages Posted: 4 Feb 2019

See all articles by Costas Hadjiyiannis

Costas Hadjiyiannis

University of Cyprus - Department of Economics

Doruk İriş

Sogang University

Chrysostomos Tabakis

KDI School of Public Policy and Management

Date Written: December 31, 2018

Abstract

We investigate the implications of consumer nationalism for multilateral trade cooperation. We develop a two-country, two-firm model, in which the firms produce horizontally differentiated products and act as Bertrand competitors. Assuming that there is asymmetry in consumer nationalism between countries, we show that the country with the (relatively more) nationalist consumers can sustain more liberal trade policies than its trade partner in a repeated-game setting. Moreover, its most cooperative equilibrium tariff is actually decreasing in the level of its consumers' nationalism, provided that countries are not too patient. On the other hand, asymmetric consumer nationalism across countries produces an anti-cooperation effect on the incentives of the country with the non-nationalist consumers.

Keywords: consumer nationalism; consumer ethnocentrism; multilateral cooperation

JEL Classification: F12; F13; F52

Suggested Citation

Hadjiyiannis, Costas and İriş, Doruk and Tabakis, Chrysostomos, Consumer Nationalism and Multilateral Trade Cooperation (December 31, 2018). KDI School of Pub Policy & Management Paper No. 18-11 (December, 2018), Available at SSRN: https://ssrn.com/abstract=3325674 or http://dx.doi.org/10.2139/ssrn.3325674

Costas Hadjiyiannis

University of Cyprus - Department of Economics ( email )

75 Kallipoleos Street
P.O. Box 20537
1678 Nicosia
Cyprus

Doruk İriş

Sogang University

Seoul 121-742
Korea, Republic of (South Korea)

Chrysostomos Tabakis (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
65
Abstract Views
454
Rank
617,745
PlumX Metrics