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On the Persistence of Leadership or Leapfrogging in International Trade

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Author Info
Motta, Massimo
Thisse, Jacques-Francois
Cabrales, Antonio

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Abstract

When two countries starting from different quality levels (reflecting different conditions on domestic market demands) open to trade, two possible equilibria arise. In the first, the quality leader maintains its position. In the second, leapfrogging occurs. However, the latter is possible only if the initial quality gap is not too wide. Further, when the risk dominance criterion is used, only the former equilibrium is selected. These results suggest that initial conditions (such as domestic market size or home demand preferences) are important factors in determining relative competitiveness of firms in international markets. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 38 (1997)
Issue (Month): 4 (November)
Pages: 809-24
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Handle: RePEc:ier:iecrev:v:38:y:1997:i:4:p:809-24

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  1. José Luis Moraga & Jean-Marie Viaene, 1999. "Endogenous Quality Effects of Trade Policy," Tinbergen Institute Discussion Papers 99-094/2, Tinbergen Institute. [Downloadable!]
  2. Lutz, Stefan, 2003. "Mutual Recognition of National Minimum Quality Standards may Support International Convergence," ZEW Discussion Papers 03-17, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  3. José Luis Moraga-González & Jean-Marie Viaene, 2004. "Dumping in Developing and Transition Economies," Tinbergen Institute Discussion Papers 04-125/2, Tinbergen Institute. [Downloadable!]
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  4. Dan Ben-David & Michael B. Loewy, 1997. "Free Trade, Growth, and Convergence," NBER Working Papers 6095, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Larry Karp & In Ho Lee, 2000. "Learning-by-Doing and the Choice of Technology: the Role of Patience," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series 857, Department of Agricultural & Resource Economics, UC Berkeley. [Downloadable!]
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  6. Mina Baliamoune & Stefan Lutz, 2009. "Preemption, Predation, and Minimum Quality Standards," ICER Working Papers 20-2009, ICER - International Centre for Economic Research. [Downloadable!]
  7. Werner Smolny, 2003. "Determinants of innovation behaviour and investment estimates for west-german manufacturing firms," Economics of Innovation and New Technology, Taylor and Francis Journals, vol. 12(5), pages 449-463, October. [Downloadable!] (restricted)
  8. José Luis Moraga-González & Jean-Marie Viaene, 2004. "Anti-dumping, Intra-industry Trade and Quality Reversals," Tinbergen Institute Discussion Papers 04-124/2, Tinbergen Institute. [Downloadable!]
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  9. FRÉDÉRIC CARLUER, 2005. "Dynamics of Russian regional clubs: The time of divergence," Regional Studies, Taylor and Francis Journals, vol. 39(6), pages 713-726, August. [Downloadable!] (restricted)
  10. Jose-Luis Moraga & Jean-Marie Viaene, 2001. "Trade and Industrial Policy of Transition Economies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  11. S Lutz, 2005. "Regulatory Standards Can Lead to Predation," The School of Economics Discussion Paper Series 0509, Economics, The University of Manchester. [Downloadable!]
  12. Theo S Eicher & Klaas vant Veld, 2000. "Search in Research: An Evolutionary Approach to Technical Change and Growth"," Discussion Papers in Economics at the University of Washington 0005, Department of Economics at the University of Washington. [Downloadable!]
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  13. Jose-Luis Moraga & Jean-Marie Viaene, 2001. "Procompetitive Trade Policies," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  14. Antonio Cabrales & Walter Garcia Fontes & Massimo Motta, 1997. "Risk Dominance Selects the Leader. An Experimental Analysis," Economics Working Papers 222, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  15. Olivier Bonroy & Christos Constantatos, 2005. "Minimum Quality Standards and Equilibrium Selection with Asymmetric Firms," Industrial Organization 0506009, EconWPA. [Downloadable!]
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  16. Stylianos Perrakis & Christos Constantatos & Jean Lefoll, 2008. "Financial Structure and Product Qualities," Discussion Paper Series 2008_15, Department of Economics, University of Macedonia, revised Dec 2008. [Downloadable!]
  17. Larry Karp & In Ho Lee, 1998. "Learning by Doing and the Choice of Technology," Levine's Working Paper Archive 2065, David K. Levine. [Downloadable!]
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