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This paper develops a two-country, general equilibrium model of oligopoly in which the degree of horizontal product differentiation is endogenously determined by firms strategic investments in product innovation. Consumers seek variety and product innovation is more skill intensive than...
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This paper studies the effect of capital controls on misallocation and welfare in an economy with financial constraints. We build a general equilibrium model with heterogeneous firms, financial constraints and international trade and calibrate it to the Chilean economy. Since high-productivity...
Persistent link: https://www.econbiz.de/10012583932
We consider a dynamic three-stage game played by two regulator-firm hierarchies to capture the scale and technological effects of opening markets to international trade. Each firm produces one good sold on the market. Firms can invest in R&D in order to lower their fixed emission/output ratio...
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economy has become highly integrated, and foreign outsourcing has become a standard practice for firms. While trade theory … production process abroad. Advances in globalization entail lower tariff rates of outsourcing. Contrary to the common wisdom, we … economy loses from globalization because the competitive sector overproduces and the oligopolistic underproduces (the …
Persistent link: https://www.econbiz.de/10011438940
The recent crisis was characterized by massive illiquidity. This paper reviews what we know and don't know about illiquidity and all its friends: market freezes, fire sales, contagion, and ultimately insolvencies and bailouts. It first explains why liquidity cannot easily be apprehended through...
Persistent link: https://www.econbiz.de/10008732226