US and Chinese Strategic Trade Policies and Product Differentiation in the ASEAN Apple Market

ABSTRACT:
We investigate oligopolistic competition between US and Chinese apple exporters in the ASEAN market using strategic trade theory and the NEIO literature. We also analyze competition in the US and Chinese domestic markets. The US supplies higher quality apples to ASEAN than China, resulting in product differentiation. The results show that US exporters had a higher markup than Chinese exporters through the 1990s; however, as the share of Chinese apples expanded, the US markup declined and the Chinese markup increased dramatically. Competitive pricing prevails both in the US and Chinese domestic markets.

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