Home bias in multimarket Cournot games

Catherine Roux, Luis Santos-Pinto () and Christian Thöni

European Economic Review, 2016, vol. 89, issue C, 361-371

Abstract: We explore the role of trade costs for the home bias in trade. In a series of Cournot duopoly experiments with a home and an export market, we compare output choices when firms face different levels of trade costs. We find that there is two-way trade in identical products and that firms hold the majority market share in their home market. The resulting home bias turns out to be, however, stronger than that predicted by theory, and it even occurs without trade costs. Tacit collusion contributes to the home bias observed in our experiment but does not offer a full explanation for the phenomenon.

Keywords: Intra-industry trade; Spatial oligopoly; Home bias; Collusion; Experiment (search for similar items in EconPapers)
JEL-codes: C91 F12 L13 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Working Paper: Home Bias in Multimarket Cournot Games (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:89:y:2016:i:c:p:361-371

DOI: 10.1016/j.euroecorev.2016.08.007

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