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.

Software Provision and the Impact of Market Integration

Both deeper market integration and advances in digital technology have driven particularly large decreases in the costs of intermarket software provision. In this note, we first explain the mechanism of how trade costs in uence the software provision decisions of software firms. Then, we investigate the transformation of production/trade patterns given gradually decreasing trade costs for software products. It is shown that, if two incompatible types of hardware exist, deeper market integration may reduce the variety of hardware technologies.software provision; market integration

Strategic Divisionalization, Product Differentiation and International Competition

In this note we construct a simple international differentiated duopoly model that involves a divisionalization decision. It will be shown that the number of third market divisions of a parent firm with a cost advantage is relatively large. The results imply that the cost competitiveness of one country’s firm will be magnified through divisionalization decisions.divisionalization; product differentiation; cost competitiveness

Software Provision and the Impact of Market Integration: A Note

Both deeper market integration and advances in digital technology have driven particularly large decreases in the costs of inter-market software provision. In this note, we first explain the mechanism of how trade costs in uence the software provision decision of software firms. Then, we investigated the transformation of production/trade patterns given gradually decreasing trade costs for software products.

Cost Hetrogeneity and Strategic Divisionalization

In this note, we consider a simple duopoly environment in which two parent firms compete in a market. We assume that there are cost differentials between these two parent firms. The parent firms' choices of divisionalization are modeled as a two-stage game. It will be shown that the number of divisions of a parent firm with a cost advantage (i.e., lower marginal costs) is relatively large. The results imply that the cost advantage of one parent firm will be magnified through divisionalization decisions.

Interregional Trade, Industrial Location and Import Infrastructure

The purpose of this study is to illustrate, with a simple two-region, two-good, two-factor model, how an improvement in one region’s import infrastructure can affect firms’ location decisions and the nature of the trading equilibrium. It is shown that, through improvements in import infrastructure, one region might divert high-tech industries to another region. This effect reduces the incentive to improve import infrastructure.Interregional Trade; Import Infrastructure

Competing Industrial Standards and the Impact of Trade Liberalization

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 consists 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 consumers' 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.

A Dynamic Chamberlin-Heckscher-Ohlin Model with Endogenous Time Preferences: A Note

This note formulates a dynamic two-country (developed and developing countries) Chamberlin-Heckscher-Ohlin model of trade with endogenous time preferences a la Uzawa (1968). We examine the relationship between initial factor endowment differences and trade patterns in the steady state. In particular, to highlight the integration of developing countries (e.g., China) into the world trading system, we concentrate on the case of asymmetric size of two countries (in terms of population). It will be shown that (i) given that the representative household in each country supplies an equal amount of labor, only intra-industry trade occurs in the steady state irrespective of differences in the number of representative households and that (ii) the number of households being equal, the country with less labor efficiency becomes the net exporter of the capital-intensive good.trade patterns; dynamic trade model; endogenous time preferences