Please click to view and download the paper. Alternatively, if you have difficulty in downloading the file, and would like to have a hard copy of it, please click here.

The paper is in .pdf format. To view and print it requires the program Adobe Acrobat Reader. If you do not have the program installed in your computer, you can download a free copy of it first.

Abstract

This paper examines how two international firms compete non-cooperatively by choosing domestic sale, export, and overseas investment, and investigates conditions for simultaneous existence of intraindustry trade and intraindustry investment. The roles of transport costs, market disadvantage, and tariff, and whether intraindustry trade and intraindustry are substitutes are explicitly analyzed. This paper determines the possibility of gains from trade and investment, and shows that in the presence of free trade, further allowing free investment is always beneficial. Competition between the firms in the long run in terms of input advantage is analyzed in a three-stage game.


Comments on this paper are most welcome. Please send them to karyiu@u.washington.edu.