Since Dixit (1984), it is well accepted that a home country's best policy is to ban imports in an oligopolistic market if the resulting monopoly has a cost advantage over imports. This note (i) provides a formal proof and (ii) extends this result to symmetric firms. When domestic instruments are...

This paper models competition among multinational firms in an environment of firm heterogeneity, incomplete cost information and strategic interaction. In this context, FDI serves as a signal of productivity: when firms sort into exporters and multinationals, they also show whether they have low...

Except for the famous Dornbusch-Fischer-Samuelson (DFS) models, most general equilibrium models of trade rely on factor price equalization. The DFS models demonstrate the gains from trade without factor price equalization under perfect competition. This paper employs a general equilibrium model...

This paper investigates the optimal acquisition strategy of a foreign investor, who wants to acquire one out of two local firms, under incomplete information. The response to acquisition offers is also a signal on firm productivity, affecting future competition. We identify a competition effect...