A Method to Construct Asymptotic Solutions Invariant under the Renormalization Group

A renormalization group method with the Lie symmetry is presented for the singular perturbation problems. Asymptotic solutions are obtained as group-invariant solutions under approximate Lie group admitted by perturbed differential equations.Comment: 9 pages, 1 figur

Indirect Network Effects and Trade Patterns

Indirect network effects exist when the utility of consumers is increasing in the variety of complementary products available for use with an electronic hardware device. In this note, we examine how indirect network effects work as a determinant of trade patterns. For these purposes we construct a simple two-country model of trade with incompatible country-specific hardware technologies. We show that trade patterns are determined by the interaction between hardware differentiation and indirect network effects due to software availability.

Indirect Network Effects and the Impact of Trade Liberalization: A Note

Indirect network effects exist when the utility of consumers is increasing in the variety of complementary software products available for use with an electronic hardware device. In this note, we examine how trade liberalization affects production structure in the presence of indirect network effects. For these purposes we construct a simple two-country model of trade with two incompatible hardware technologies. It is shown that, given that both types of hardware exist before trade liberalization, liberalization may reduce the variety of hardware technology via intensified network effects. It is also shown that, contrary to the findings of previous studies, some consumers may become worse off as the result of trade. In other words, trade liberalization, which forms the basis for a greater variety of software products, may work as a catalyst for Pareto inferior outcomes.

Competing Industrial Standards and the Impact of Trade Liberalization:Revised and Enlarged

The main purpose of this study is to illustrate, with simple trade theory, the relationship between competing industrial standards and trade liberalization. We assume that there are two competing industrial standards in an international context, each of which applies to a group of differentiated products. A product can be used only in combination with other products based on the same industrial standard.We examine the impact of trade liberalization (i.e., a decline in trade costs) on consumersf choice of a standard. It will be shown that the degree of indirect network effects, captured with substitution between differentiated products, plays an important role as a determinant of the impact of trade liberalization.