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East Asian Economic Review Vol. 4, No. 2, 2000. pp. 43-97.

DOI https://dx.doi.org/10.11644/KIEP.JEAI.2000.4.2.65

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Strategic Interaction and International Trade: The case of the Steel Industry

Author

Eui-Hyun Choi

Korea Institute for International Economic Policy (KIEP)
Creative Commons Attribution License

EAER is an open access journal distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license.

Abstract

The purpose of this study is to analyze strategic interaction and intra-industry trade. We derive an oligopolistic model of intra-industry trade, which is initially proposed by Brander(1981). Until now there were many studies on intra-industry trade, however empirical literature on intra-industry trade has evolved independently of the theoretical literature. In this study, a theory-based empirical analysis of intra-industry trade in a oligopolistic market will be conducted instead of in a monopolistic competition market. The empirical implications of the multi-country Cournot model are investigated in context of intra-industry trade in the steel industry. Despite the fact that not all assumptions induced from Brander model may be satisfies, the empirical results indicated that the effects of the cost structure and market size variables on the intensity of intra-industry trade are in accordance with what the theory suggests. The fact that intra-industry trade exists in disaggregate products, and these trade patterns are more characterized by the Cournot competition, strengthens Brander’s model.

JEL classification: F12, F13, F14

Keywords

International Trade, Steel Industry, Korea, United States, Japan

Language

Korean

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