The result of Colombo and Labrecciosa [Colombo, Luca and Labrecciosa, Paola (2006). 'The suboptimality of optimal punishments in Cournot supergames', Economics Letters 90, pp. 116-121.] that optimal punishments are inferior to Nash-reversion trigger strategies with decreasing marginal costs is...

A Cournot duopoly model is used to explain the paradox that multilateral trade liberalisation has resulted in increases in both the volume of world trade and the amount of foreign direct investment (FDI).

This paper analyses unilateral trade liberalisation in a Cournot duopoly model where the domestic and the foreign firm have different marginal costs. There are three results in the paper. Firstly, with linear demand, it is shown that the domestic country will lose as a result of unilateral free...