An Imperpect Competition Model in an Industry with Differentiated Domestic and Foreign Products
The purpose of this paper is to build a simple model of the demand for domestically produced and imported commodities and their prices in an industry with imperfect competition, symmetric firms and differentiated domestic and foreign products. The model should also be such that it could be parameterized and estimated. No preassumptions are made regarding the mode of competition, and the conjectural variations elasticity is allowed to vary over time. This paper relies mostly on Venables (1985) and Ilmakunnas (1985).
KeywordsMarginal Cost Domestic Market Price Elasticity Foreign Firm Profit Maximization
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