When two countries starting from different quality levels (reflecting different conditions on domestic market demands) open to trade, two possible equilibria arise. In the first, the quality leader maintains its position. In the second, leapfrogging occurs. However, the latter is possible only...

The authors introduce commodity taxation into a vertical differentiation model with endogenous product selection. They show that a uniform ad valorem tax lowers both qualities, distorts the allocation of consumers between firms, and lowers the consumer prices of both variants. A small uniform...

The log it model is usually derived from a discrete choice approach with stoc hastic utilities. It is shown here that the logit demand system may also be derived from the maximization of a deterministic, entropy-type utility. The latter may be interpreted as the preference function of a...

The authors analyze the effect of economic integration on oligopolists' international trade and foreign direct investment activities, using a three-country, three-firm model. Increased country size leads to dispersed foreign direct investment, while improved market accessibility leads to...