First Mover Advantages, Blockaded Entry, and the Economics of Uneven Development

31 Pages Posted: 15 Jan 2007 Last revised: 24 Jun 2010

See all articles by James R. Markusen

James R. Markusen

University of Colorado at Boulder - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Date Written: March 1990

Abstract

A two-sector, two-period trade model is developed in which one sector has increasing returns based on the creation of specialized intermediate inputs. One of the two (otherwise identical) countries is not able to enter the increasing returns sector in the first period through some "accident of history". A theoretical and numerical analysis solves for parameter regimes under which firms in the disadvantaged country are or are not able to enter the increasing returns sector in the second period. The welfare consequences of the two alternative second period outcomes are compared to one another and to an equilibrium with both countries entering in the first period. The disadvantaged country may fall further behind in the second period even when its firms are able to enter.

Suggested Citation

Markusen, James R., First Mover Advantages, Blockaded Entry, and the Economics of Uneven Development (March 1990). NBER Working Paper No. w3284. Available at SSRN: https://ssrn.com/abstract=468806

James R. Markusen (Contact Author)

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309
United States
303-492-0748 (Phone)
303-492-8960 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
United States

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