This article calculates conduct parameters (or "conjectural variations") for a set of duopoly airline routes. We estimate the mean conduct parameter for each airline and draw inferences about whether Bertrand, Cournot, or cartel models are supported by the data. Some sensitivity analysis with...

This paper provides a new and simple model of endogenous horizontal product differentiation based on a standard demand structure derived from quadratic utility. One objective of the paper is to explain the “empirical Bertrand paradox” – the failure to observe homogeneous product Bertrand...

This paper investigates the effect of endogenous horizontal product differentiation on trade patterns and the gains from trade under Bertrand and Cournot oligopoly. Firms differentiate their products to mitigate competition, but only if the investment required is not too high. Investment in...

Under what circumstances would Adam Smith's statement "the division of labour is limited by the extent of the market" be valid. This paper shows the validity of Smith's law depends not on increasing returns to scale, but on the effect of scale on economies of scope (i.e. cost complementarities...

This paper develops a model in which the rivalry of oligopolistic firms serves as an independent cause of international trade. The model shows how such rivalry naturally gives rise to "dumping" of output in foreign markets, and shows that such dumping can be "reciprocal" -- that is, there may be...

Often considered one of the major forces behind economic growth and development, the entrepreneurial firm can accelerate the speed of innovation and dissemination of new technologies, thus increasing a country's competitive edge in the global market. As a result, cultivating a strong culture of...