A Chicken Game of Intraindustry Trade
We study the strategic interaction between two firms competing in quantites which decide whether exporting into each other market. The product is homogeneous and production entails constant returns to scale. Scope effects are present. By dealing with two types of trade costs, namely per unit and ad valorem trade costs, we characterize the set of Nash equilibria showing that one way trade is a possible outcome of the trade game. In particular, despite the assumption on symmetry between firms, unilateral trade arises provided trade costs are sufficiently high. The private incentives towards one way trade are then compared with the social ones.
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- Brander, James & Krugman, Paul, 1983.
"A 'reciprocal dumping' model of international trade,"
Journal of International Economics,
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- James Brander & Paul Krugman, 1980. "A "Reciprocal Dumping" Model of International Trade," Working Papers 405, Queen's University, Department of Economics.
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- James Brander & Paul Krugman, 1982. "A 'Reciprocal Dumping' Model of International Trade," Working Papers 513, Queen's University, Department of Economics.
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- David J. Teece, 2003. "Towards an Economic Theory of the Multiproduct Firm," World Scientific Book Chapters,in: Essays In Technology Management And Policy Selected Papers of David J Teece, chapter 15, pages 419-446 World Scientific Publishing Co. Pte. Ltd..
- Teece, David J., 1982. "Towards an economic theory of the multiproduct firm," Journal of Economic Behavior & Organization, Elsevier, vol. 3(1), pages 39-63, March.
- Mujumdar, Sudesh, 2004. "Revenue implications of trade liberalization under imperfect competition," Economics Letters, Elsevier, vol. 82(1), pages 83-89, January.
- K. C. Fung, 1991. "Collusive Intra-industry Trade," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 391-404, May.
- B. Douglas Bernheim & Michael D. Whinston, 1990. "Multimarket Contact and Collusive Behavior," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 1-26, Spring.
- Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
- Fung, K C, 1992. "Economic Integration as Competitive Discipline," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(4), pages 837-847, November.
- Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, vol. 11(1), pages 1-14, February.
- James Brander, 1980. "Intra-Industry Trade in Identical Commodities," Working Papers 380, Queen's University, Department of Economics.
- Pinto, Brian, 1986. "Repeated games and the reciprocal dumping model of trade," Journal of International Economics, Elsevier, vol. 20(3-4), pages 357-366, May. Full references (including those not matched with items on IDEAS)
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