Global social interactions reshape markets, delaying price reductions in international trade.
Social interactions among consumers influence markets by spreading information about product quality. As consumers share information, demand changes, impacting prices and quantities produced by companies. Market prices eventually reach a certain level, but this can happen in different ways depending on the size difference between countries. If countries are very different in size, monopoly prices may persist for a while before transitioning to duopoly prices. This delay in price reduction may affect the benefits of globalization. Understanding how social interactions shape market outcomes is crucial for international economic integration.