Beyond Trade Costs: Firms’ Endogenous Access to International Markets

Armando Garcia Pires

Journal of Industry, Competition and Trade, 2014, vol. 14, issue 2, 229-257

Abstract: In this paper, we explore another factor besides trade costs that can affect firms’ exports: strategic interaction between firms in R&D investment. Three results can be highlighted. First, the volume of trade is higher in the presence of R&D than in the absence of it, given that R&D reduces marginal costs. Second, like with reductions in trade costs, international trade grows with increases in the return on R&D, since technological progress enhances firms’ competitiveness. Third, when firms differ in commitment power in R&D, the R&D leader plays strategically in R&D in order to become more competitive and to be more active in international markets than the R&D follower. Copyright Springer Science+Business Media New York 2014

Keywords: R&D investment; Commitment power; Endogenous asymmetric firms; Market access; F12; L13; L25 (search for similar items in EconPapers)
Date: 2014
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Working Paper: Beyond Trade Costs: Firms' Endogenous Access to International Markets (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jincot:v:14:y:2014:i:2:p:229-257

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DOI: 10.1007/s10842-013-0158-9

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