Home Bias in Multimarket Cournot Games

Catherine Roux, Luis Santos-Pinto (luispedro.santospinto@unil.ch) and Christian Thöni

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

Abstract: We explore the role played by 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 export 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. We have strong evidence that collusion contributes to the home bias observed in our experiment.

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)
Pages: 24 pp.
Date: 2015-04
New Economics Papers: this item is included in nep-bec, nep-exp, nep-ind, nep-int and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Home bias in multimarket Cournot games (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:15.04

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