We analyze the effect of competition in market-accessibility enhancement among quality-differentiated firms. Firms are located in regions with different ex-ante transport costs to reach the final market. We characterize the equilibrium of the two-stage game in which firms first invest to improve...

This paper contributes to the vast and growing literature on trade and quality by providing a parsimonious explanation of the observed increase in unit values (and thus quality) of shipped goods with the distance of the country of destination. This mechanism is based on the influence of distance...

We argue that it is the number of agents holding market power, rather than the presence of market power itself, that may force Ricardian economies into autarchy. We apply the concepts of monopoly equilibrium by Baldwin (1948) to the model of Cordella and Gabszewicz (1997) to show that,...

Cost functions of three Canadian food processing sectors (meat, bakery and dairy) are estimated using provincial data. A translog functional form is used and the concavity property of the cost function is imposed locally. The Morishima substitution elasticities and scale elasticities are...

We analyze credence goods markets in the case of two firms. Consumers know that the quality of the good varies but do not know which firm is of high quality. First, we show that the high quality producer may be unable to monopolize the market, or even to survive in some cases, in situations...