Payoff interdependence and welfare-improving location diversification

Liu, Yi and Matsumura, Toshihiro (2024): Payoff interdependence and welfare-improving location diversification.

Abstract

We formulate a duopoly model with international location choice in the presence of global common ownership. We theoretically examine how payoff interdependence caused by overlapping ownership such as common and cross ownership affects location and production choices, and resulting welfare. We find that positive payoff interdependence enhances international location diversification, which may improve global welfare.

• Item Type: MPRA Paper
• Language: English
• Keywords: Overlapping ownership; Transport costs; Welfare-improving production substitution; Spatial Cournot; Market-oriented location; Cost-oriented location
• Subjects: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R32 - Other Spatial Production and Pricing Analysis

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