The scope for strategic asymmetry under international rivalry

John Gilbert, Onur Koska and Reza Oladi

International Review of Economics & Finance, 2022, vol. 80, issue C, 464-468

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)
Date: 2022
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Working Paper: The Scope for Strategic Asymmetry Under International Rivalry (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:80:y:2022:i:c:p:464-468

DOI: 10.1016/j.iref.2022.02.013

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