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A Geographic Game with Intermediate Goods

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Author Info
José Pedro Pontes

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Abstract

The paper treats a noncooperative game where an upstream firm and two downstream firms select locations in a spatial system made by two asymmetric countries. The location of the upstream firm is indeterminate and it is assigned to the smaller country, in order to avoid triviality of the location problem. The Nash equilibria of locations of the downstream firms is characterized in the parameter space (coefficient of input transactions, transport cost) although not everywhere uniquely. Keeping the degree of technological interdependency high, economic integration, as measured by the decline of transport costs, shifts production from the country where the input is produced to the larger country. In opposition, keeping transport costs low, technical progress, as measured by the intensity of input transactions, shifts production from the large market to the country where the input is produced.

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Publisher Info
Paper provided by Department of Economics at the School of Economics and Management (ISEG), Technical University of Lisbon. in its series Working Papers with number 2001/10.

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Date of creation: 2001
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Handle: RePEc:ise:isegwp:wp102001

Contact details of provider:
Postal: Department of Economics, School of Economics and Management (ISEG), Technical University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: http://www.iseg.utl.pt/departamentos/economia/

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Related research
Keywords: Noncooperative games; Location; Intermediate Goods; New Economic Geography..;

Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General

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This page was last updated on 2009-10-23.

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