Strategic Export Decisions in International Trade

Kazuhiro Takauchi, Tomomichi Mizuno and Katsufumi Fukuda
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Katsufumi Fukuda: School of Global Studies, Chukyo University and Research Institute for Economics & Business Administration (RIEB), Kobe University, JAPAN

No DP2024-21, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: The type of marginal cost faced by a firm is important when considering the firm's export behavior. However, in the literature, it is frequently assumed that firms have constant marginal costs. By contrast, this paper considers the case in which a firm's marginal cost is increasing, and the firm pays a fixed cost when it exports. We show that an asymmetric trade pattern, whereby one country exports but the other does not, appears in a symmetric two-country two-firm setting. We also show that trade liberalization produces a non-monotonic change in welfare because of reduced transport costs.

Keywords: Increasing marginal cost; Fixed export cost; Transport cost; Trade pattern (search for similar items in EconPapers)
JEL-codes: D43 F12 L13 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2024-07
New Economics Papers: this item is included in nep-int
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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2024-21.pdf First version, 2024 (application/pdf)

Related works:
Working Paper: Strategic export decisions in international trade (2024)
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