On the Persistence of Leadership or Leapfrogging in International Trade
AbstractWhen two countries, starting from different quality levels reflecting different conditions of domestic market demand, open to trade, two possible equilibria arise. In the first, the quality leader maintains its position. In the second, leapfrogging occurs. The latter is possible only if the initial quality gap is not too wide, however. Further, when the risk dominance criterion is used, only the former equilibrium is selected. This result holds for both segmented and integrated markets. Qualities, profits and world welfare are higher when firms can price discriminate (i.e. under segmented markets).
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1106.
Date of creation: Jan 1995
Date of revision:
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Other versions of this item:
- Motta, Massimo & Thisse, Jacques-Francois & Cabrales, Antonio, 1997. "On the Persistence of Leadership or Leapfrogging in International Trade," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 809-24, November.
- Motta, Massimo & Thisse, Jacques-François & Cabrales, Antonio, . "On the persistence of leadership or leapfrogging in international trade," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/3683, Universidad Carlos III de Madrid.
- Cabrales, Antonio & Motta, Massimo & Thisse, Jacques-François, . "On the Persistence of Leadership or Leapfrogging in International Trade," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/3512, Universidad Carlos III de Madrid.
- Massimo MOTTA & Jean-François THISSE & Antonio CABRALES, 1996. "On the Persistence of Leadership or Leapfrogging in International Trade," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 9625, Université de Lausanne, Faculté des HEC, DEEP.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
- F15 - International Economics - - Trade - - - Economic Integration
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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