Cabrales, AntonioMotta, Massimo2021-03-012021-03-012001Cabrales A, Motta M. Country asymmetries, endogenous product choice and the timing of trade liberalization. Eur Econ Rev. 2001 Jan;45(1):87-107. DOI: 10.1016/S0014-2921(99)00073-20014-2921http://hdl.handle.net/10230/46619We analyze the effects of trade liberalization on firms’ decisions and profits in a vertical product differentiation model with countries which have different characteristics. Firms decide product specifications at the beginning of the game, in which autarky is followed by trade liberalization (whose date is anticipated). Our analysis suggests that a firm located in a large (or rich) country is the likely market leader at the trade equilibrium. This outcome might be reversed if small country firms have a strong cost advantage, transport costs are negligible, or if the large country opens its market before the small one.application/pdfeng© Elsevier http://dx.doi.org/10.1016/S0014-2921(99)00073-2info:eu-repo/semantics/articlehttp://dx.doi.org/10.1016/S0014-2921(99)00073-2Trade liberalizationProduct differentiationInternational tradeinfo:eu-repo/semantics/openAccess