Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/330000 
Year of Publication: 
2023
Citation: 
[Journal:] Games [ISSN:] 2073-4336 [Volume:] 14 [Issue:] 1 [Article No.:] 6 [Year:] 2023 [Pages:] 1-14
Publisher: 
MDPI, Basel
Abstract: 
Ignoring strategic interactions among final goods producers, the extant theoretical literature shows that lower costs of imported inputs increase the exports of the final goods using those inputs. Hence, it does not explain the empirically relevant positive relationship between the costs of imported inputs and the export of the final goods. We use a simple Cournot duopoly (i.e., duopoly quantity competition) with homogeneous products to show that if the exporters differ in input coefficients, lower costs of imported inputs may increase or decrease the exports of the final goods. Thus, we argue that strategic interdependence among the exporters can be an important factor for the positive relationship between lower costs of imported inputs and the export of the final goods. We further show that a lower cost of imported inputs may reduce the consumer surplus, total profits of the exporters, and world welfare. We also show the implications of a Bertrand duopoly (i.e., duopoly price competition) with horizontal product differentiation for our analysis.
Subjects: 
export
import
productivity
JEL: 
D43
F23
L13
L23
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
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