This paper examines the role of dual sourcing (e.g., outside options) in vertical and horizontal relations. In a bilateral monopoly market, if either the upstream or downstream firm has outside options, the other firm could lose from seemingly positive shocks, e.g., market expansion or...

This paper examines the role of dual sourcing (e.g., outside options) in vertical and horizontal relations. In a bilateral monopoly market, if either the upstream or downstream firm has outside options, the other firm could lose from seemingly positive shocks, e.g., market expansion or...

This paper constructs a dynamic scale-free North-South model of trade with endogenous innovation. In the North two types of R&D races take place simultaneously within each industry. One is local-sourcing-targeted R&D race, which results in the winner firm manufacturing in the North. The other is...

We construct a two-country North–South Product-cycle model of trade with endogenous growth and trade barriers. We remove the scale effects on growth by incorporating rent protection activities by Northern incumbents. We examine the effects of two forms of globalization – an expansion of the...