The authors build a trade model that renders tractable the process in which imperfect competition in a country's downstream sector affects the rest of the world through international trade. For this purpose, internationally traded goods are viewed as middle products in the vertical chain of...

The introduction of a new product often causes a massive (discrete) demand shift to the new product. This study demonstrates that if a large-scale demand shift to a new product is accompanied by network externalities, it may result in `submarginal-cost pricing,' by which the seller sets its...