The Dynamics of Trade and Competition
... No location decision in the short run. The number of firms in each country is given – but firms can still choose to participate in each market, i.e. choose to produce for domestic and/or for foreign market. In other words, the number of firms operating in each market is endogenous (since decision to ...
... No location decision in the short run. The number of firms in each country is given – but firms can still choose to participate in each market, i.e. choose to produce for domestic and/or for foreign market. In other words, the number of firms operating in each market is endogenous (since decision to ...
Chapter 6: Consumer and Producer Surplus
... e.g. I get inoculated against the flu, making it less likely that you’ll get the flu. Note that in all of the above cases, the person/firm generating the externality did not compensate the people who had to suffer the external cost or was not compensated for providing an external benefit. The result ...
... e.g. I get inoculated against the flu, making it less likely that you’ll get the flu. Note that in all of the above cases, the person/firm generating the externality did not compensate the people who had to suffer the external cost or was not compensated for providing an external benefit. The result ...
Chapter 5
... comparative advantage over the U.S. in producing certain defense goods. In order to make firms produce in a less than maximally efficient way, either protections or direct subsidies may be required. Again, for their transparency, economists generally favor subsidies over tarriffs. 3. Inexpensive For ...
... comparative advantage over the U.S. in producing certain defense goods. In order to make firms produce in a less than maximally efficient way, either protections or direct subsidies may be required. Again, for their transparency, economists generally favor subsidies over tarriffs. 3. Inexpensive For ...
Personal Fabrication as an Operational Strategy : Value of
... commitment: a firm adopting PF strategy obtains the same profit as a traditional firm that credibly commits to the monopoly optimal quality position. When we consider the cost disadvantage of 3D printing compared to mass production, PF strategy may benefit an established firm, only when the cost dis ...
... commitment: a firm adopting PF strategy obtains the same profit as a traditional firm that credibly commits to the monopoly optimal quality position. When we consider the cost disadvantage of 3D printing compared to mass production, PF strategy may benefit an established firm, only when the cost dis ...
Comparative Advantage and Trade Barriers
... economy. The student is expected to: (A) explain the concepts of absolute and comparative advantages; (B) apply the concept of comparative advantage to explain why and how countries trade; and (C) analyze the impact of U.S. imports and exports on the United States and its trading partners. ...
... economy. The student is expected to: (A) explain the concepts of absolute and comparative advantages; (B) apply the concept of comparative advantage to explain why and how countries trade; and (C) analyze the impact of U.S. imports and exports on the United States and its trading partners. ...
Ch.9
... Monopoly vs. Perfect Competition • Economic profit – Reduced to zero by entry of other firms – in perfect competition – Continue indefinitely – in monopoly ...
... Monopoly vs. Perfect Competition • Economic profit – Reduced to zero by entry of other firms – in perfect competition – Continue indefinitely – in monopoly ...
Brander–Spencer model
The Brander–Spencer model is an economic model in international trade originally developed by James Brander and Barbara Spencer in the early 1980s. The model illustrates a situation where, under certain assumptions, a government can subsidize domestic firms to help them in their competition against foreign producers and in doing so enhances national welfare. This conclusion stands in contrast to results from most international trade models, in which government non-interference is socially optimal.The basic model is a variation on the Stackelberg–Cournot ""leader and follower"" duopoly game. Alternatively, the model can be portrayed in game theoretic terms as initially a game with multiple Nash equilibria, with government having the capability of affecting the payoffs to switch to a game with just one equilibrium. Although it is possible for the national government to increase a country's welfare in the model through export subsidies, the policy is of beggar thy neighbor type. This also means that if all governments simultaneously attempt to follow the policy prescription of the model, all countries would wind up worse off.The model was part of the ""New Trade Theory"" that was developed in the late 1970s and early 1980s, which incorporated then recent developments from literature on industrial organization into theories of international trade. In particular, like in many other New Trade Theory models, economies of scale (in this case, in the form of fixed entry costs) play an important role in the Brander–Spencer model.