The Scope for Strategic Asymmetry Under International Rivalry

John Gilbert, Onur Koska and Reza Oladi

Working Papers in Economics from University of Canterbury, Department of Economics and Finance

Abstract: In the context of a model of international trade through reciprocal dumping with horizontally differentiated goods, we study the endogenous choice of quantities and prices as strategic variables. We show that while a Cournot outcome prevails under conditions of export rivalry, strategic asymmetry under foreign direct investment rivalry may be observed, especially when it is possible to initially deter FDI by committing to a price contract, and when switching is costly and/or takes time.

Keywords: Exports vs. FDI; Horizontal Product Differentiation; Cournot-Bertrand-Nash Equilibrium (search for similar items in EconPapers)
JEL-codes: D43 F12 F23 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2022-02-01
New Economics Papers: this item is included in nep-com, nep-cta, nep-gth and nep-int
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Related works:
Journal Article: The scope for strategic asymmetry under international rivalry (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:cbt:econwp:22/04

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