Quantity-setting games with a dominant firm

We consider a possible game-theoretic foundation of Forchheimer’s model of dominant-firm price leadership based on quantity-setting games with one large firm and many small firms. If the large firm is the exogenously given first mover, we obtain Forchheimer’s model. We also investigate whether the large firm can emerge as a first mover of a timing game.     

Country‐Specific Determinants of Horizontal and Vertical Intra‐industry Agri‐food Trade: The Case of the EU New Member States

Intra‐industry trade (IIT) has become a widespread phenomenon with a growing role in international trade, though agricultural trade is usually neglected in empirical works. This article identifies the determinants of horizontal and vertical intra‐industry agri‐food trade between New Member States (NMS) and the EU‐27 in 1999–2010, by applying static and dynamic models with different specifications to panel data. Results show that IIT is mainly of a vertical nature in the NMS, though the majority of NMS export low quality agri‐food products to EU‐27 markets. Factor endowments are negatively related to agri‐food horizontal intra‐industry trade (HIIT), but positively to vertical intra‐industry trade (VIIT). Economic size is positively and significantly related to both types of IIT, while distance and IIT are found to be negatively related in both cases. Results also suggest that HIIT and VIIT are greater if a New Member State exports agri‐food products to another NMS while EU accession has had positive and significant impacts on both HIIT and VIIT, suggesting that economic integration fosters IIT.     

Monetary Union and Pegging in the Presence of Labor Unions*

As the European Economic and Monetary Union grows, power over monetary policy is shifting away from the original founders. Previously, researchers have analyzed the impact of replacing an exchange‐rate peg with a monetary union in the presence of labor unions. In these studies, the authors have consistently concluded that unemployment in the country that originally controlled monetary policy will rise, although they cite very different reasons. In this paper, we present a more general model that reproduces the previous results in special cases and clarifies the relations across the results. In addition, the more general model shows that the results are reversed in certain conditions.