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Successive Expansion and Stability of Network Integration in International Trade

In: International Trade and Economic Dynamics

Author

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  • Noritsugu Nakanishi

    (Kobe University)

Abstract

We construct a model of an international network integration formation game in which each country decides whether to join or exit from the existing international network integration and is assumed to be sufficiently farsighted to understand not only the immediate outcome of its own entry—exit but also the ultimate outcome resulting from the successive entry—exit by other countries. We demonstrate that there exists a unique farsighted stable set for this game that supports a Pareto-efficient network integration. In most cases, the worldwide network integration can be supported by the farsighted stable set.

Suggested Citation

  • Noritsugu Nakanishi, 2009. "Successive Expansion and Stability of Network Integration in International Trade," Springer Books, in: Takashi Kamihigashi & Laixun Zhao (ed.), International Trade and Economic Dynamics, pages 161-185, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-78676-4_15
    DOI: 10.1007/978-3-540-78676-4_15
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