International trade is modeled as a two-stage game between firms in different countries. At the first stage, firms choose their capacity and, at the second stage, play a separate price game in each national market, given their worldwide capacity. It is established that firms use capacity strategically in order to manipulate the distribution of rivals' output between markets. The volume of intraindustry trade is intermediate between the cases of integrated and segmented market Cournot export s...Expand abstract
- Journal of International Economics
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International Capacity Choice and National Market Games.
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