Trade reforms in transition economies are analyzed in a model of trade and vertical product differentiation. We first show that trade liberalization in transition economies reduces the local firm's output and raises the prices of all variants. Second, we find that neither free trade nor the...

The optimum behavior of a competitive risk-averse international trader who supplies or demands commodities invoiced in foreign currency is examined when his profits are subject to several forms of risk: production, domestic cost, the exchange rate and the commodity price. The focus of our study...

This paper investigates the strategic incentives for vertical foreign investment by risk-neutral oligopolistic firms and the effect of exchange rate uncertainty on such investment. Firms competing in a domestic final good market meet their input requirements through import. They have the option...

We show that in a fully integrated economy, in which there is free mobility of goods and factors, each member’s share of total output will equal its shares of total stocks of productive factors (i.e., physical and human capital). We label this result the equal-share relationship. This...

We study the optimal trade policy against a foreign oligopoly withendogenous quality. We show that, under the Most Favoured Nation(MFN) clause, a uniform tariff policy is always welfare improvingover the free trade equilibrium. However, a nonuniform tariff policyis always desirable on welfare...

Forthcoming in the <I>International Economic Review</I>.<P> We examine an export game where two firms (home and foreign), located in two differentcountries, produce vertically differentiated products. The foreign firm is the most efficientin terms of R&D costs of quality development and the foreign...</p></i>

We build a simple theoretical model to understand why developing and transition economieshave increasingly applied anti-dumping laws. To that end, we investigate the strategic incentivesof oligopolistic exporting firms to undertake dumping in these economies. We show that dumpingmay be due to...