Endogenous Market Structures in International Trade
Almost all of the large literature on international trade with imperfect competition assumes exogenous market structures. The purpose of this paper is to develop a simple model that generates alternative market structures as Nash equilibria for different parameterizations of the basic model. Familiar configurations such as a duopoly competing in exports or a single multinational producing in both markets arise as special cases. Small tax-policy changes can produce large welfare effects as the equilibrium market structure shifts, implying discontinuous jumps in prices, quantities, and profits.
Year of publication: |
1990-03
|
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Authors: | Markusen, James R. ; Horstmann, Ignatius J. |
Institutions: | National Bureau of Economic Research (NBER) |
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