A Chicken Game of Intraindustry Trade

Colombo, Luca ; Labrecciosa, Paola ; Lambertini, Luca (2005) A Chicken Game of Intraindustry Trade. Bologna: Dipartimento di Scienze economiche DSE, p. 15. DOI 10.6092/unibo/amsacta/4741. In: Quaderni - Working Paper DSE (548). ISSN 2282-6483.
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Abstract

We study the strategic interaction between two firms competing in quantites which decide whether exporting into each other market. The product is homogeneous and production entails constant returns to scale. Scope effects are present. By dealing with two types of trade costs, namely per unit and ad valorem trade costs, we characterize the set of Nash equilibria showing that one way trade is a possible outcome of the trade game. In particular, despite the assumption on symmetry between firms, unilateral trade arises provided trade costs are sufficiently high. The private incentives towards one way trade are then compared with the social ones.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Colombo, Luca
Labrecciosa, Paola
Lambertini, Luca
Keywords
intra-industry trade, unilateral trade, trade costs, economies of scope
Subjects
ISSN
2282-6483
DOI
Deposit date
01 Apr 2016 09:31
Last modified
01 Apr 2016 09:32
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