We show that the static duopoly model in which firms choose between exporting and foreign direct investment is often a prisoners' dilemma game in which a switch from exporting to foreign direct investment reduces profits. By contrast, we show that when the game is repeated there is a range of...

Competition policy aims to prevent anticompetitive agreements and mergers, limiting the abusive exercise of market power. The formulation and application of this policy presents significant challenges, which include showing that proposed mergers are anticompetitive, proving that firms are...