The authors analyze a two-country, general equilibrium model. The countries are identical, except for the existence of an efficiently operating market for producer services in one country, which allows it to gain cost advantages by using differentiated services as an intermediate input in the...

The theory of contestable markets emphasizes potential competition; yet it is reticent on the identity of potential entrants. Recent literature discusses the (im)possibility of hit-and-run entry for several types of entrants. R. D. Cairns and D. Mahabir (1988) argue that existing firms in...