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Asymmetric entry equilibrium in a symmetric trading oligopoly

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posted on 29.08.2014, 10:53 by Huw Edwards
We examine the R&D and export decisions of two ex ante symmetric firms in symmetric countries, with both unit trade costs and fixed entry costs to the export market. When both trade costs are low, there will be a symmetric, cross-hauling duopoly, but if fixed costs are fairly high, unit trade costs are low and R&D is relatively cheap, there will be an asymmetric entry equilibrium, in which the exporting firm carries out higher R&D, has lower costs and larger profits. With higher R&D costs and/or higher unit trade costs, there will also be a zone where crosshauling duopoly and non-trading are simultaneously Nash equilibria.

History

School

  • Business and Economics

Department

  • Economics

Citation

EDWARDS, T.H., 2014. Asymmetric entry equilibrium in a symmetric trading oligopoly. Loughborough University School of Business and Economics, WP 2014 – 03.

Publisher

© Loughborough University

Version

SMUR (Submitted Manuscript Under Review)

Publisher statement

This work is made available according to the conditions of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) licence. Full details of this licence are available at: https://creativecommons.org/licenses/by-nc-nd/4.0/

Publication date

2014

Notes

This is a working paper.

ISSN

1750-4171

Book series

Economics Discussion Paper Series;WP 2014 – 03

Language

en

Usage metrics

Loughborough Publications

Keywords

Exports