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Payoff interdependence and welfare-improving location diversification

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  • Liu, Yi
  • Matsumura, Toshihiro

Abstract

We formulate a duopoly model with international location choice in the presence of global common ownership. We theoretically examine how payoff interdependence caused by overlapping ownership such as common and cross ownership affects location and production choices, and resulting welfare. We find that positive payoff interdependence enhances international location diversification, which may improve global welfare.

Suggested Citation

  • Liu, Yi & Matsumura, Toshihiro, 2024. "Payoff interdependence and welfare-improving location diversification," MPRA Paper 120495, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:120495
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    References listed on IDEAS

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    More about this item

    Keywords

    Overlapping ownership; Transport costs; Welfare-improving production substitution; Spatial Cournot; Market-oriented location; Cost-oriented location;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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