Download This PaperRandom Encounters and Information Diffusion about Markets
27 Pages Posted: 8 May 2020
Date Written: October 14, 19
Abstract
International openness enhances social interactions between citizens of different countries or regions and vice versa. Social exchanges, in turn, increase trade flows between countries and influence markets and prices. We analyze the increased mobility that follows from openness between two countries and its effects on market outcomes. The primary result of our analysis shows that at the limit, market prices tend to align with the duopoly solution. Nonetheless, this convergence can take two different paths depending on the size asymmetry between countries.
Keywords: Vertically Differentiated Markets, Information Diffusion, Openness
JEL Classification: D42, D43, L1, L12, L13, L41
Suggested Citation: Suggested Citation