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Relationship-specific Investment as a Barrier to Entry

  • Hiroshi Kitamura

    ()

    (Faculty of Economics, Kyoto Sangyo University)

  • Akira Miyaoka

    ()

    (Graduate School of Economics, Osaka University)

  • Misato Sato

    ()

    (Department of Economics, The George Washington University)

Registered author(s):

    In this paper, we construct an interregional trade model that has en- dogenous fertility rates in the manner of Helpman and Krugman (1985). The presented model shows that fertility rates in a large region become lower than those in a small region because of the agglomeration of man- ufacturing firms in the former. The agglomeration of firms in a region lowers the relative price of manufactured goods to child rearing costs, which raises the fertility rates. We also find that a decline in transportation costs results in the ag- glomeration of manufacturing firms, which lowers fertility rates in both large and small regions. Finally, we extend our two-region model to a multi-region model and find that the number of manufacturing firms in larger regions is always greater than that in smaller regions, meaning that fertility rates in the former are always lower than those in the latter.

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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/1324.pdf
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    Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 13-24.

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    Length: 46 pages
    Date of creation: Sep 2013
    Date of revision:
    Handle: RePEc:osk:wpaper:1324
    Contact details of provider: Web page: http://www.econ.osaka-u.ac.jp/
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    1. Wright, Julian, 2008. "Naked exclusion and the anticompetitive accommodation of entry," Economics Letters, Elsevier, vol. 98(1), pages 107-112, January.
    2. Marvel, Howard P, 1982. "Exclusive Dealing," Journal of Law and Economics, University of Chicago Press, vol. 25(1), pages 1-25, April.
    3. Milgrom, Paul & Roberts, John, 1982. "Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis," Econometrica, Econometric Society, vol. 50(2), pages 443-59, March.
    4. A. Michael Spence, 1977. "Entry, Capacity, Investment and Oligopolistic Pricing," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 534-544, Autumn.
    5. Aggey Semenov & Julian Wright, 2014. "Exclusion via Non-Exclusive Contracts," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 325-347, February.
    6. Ilya Segal & Michael D. Whinston, 2000. "Exclusive Contracts and Protection of Investments," RAND Journal of Economics, The RAND Corporation, vol. 31(4), pages 603-633, Winter.
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