@article{Blanchard:121117,
      recid = {121117},
      author = {Blanchard, Pierre and Gaigne, Carl and Mathieu, Claude},
      title = {Trade Costs and International Strategy of Firms: the Role  of Endogenous Product Differentiation},
      address = {2012-02},
      number = {1643-2016-135254},
      series = {CREATE Working Paper},
      pages = {36},
      year = {2012},
      abstract = {We study the impact of trade liberalization on the  international strategy of firms (to export and/or invest  abroad as well as the number of varieties to be produced)  when product differentiation is endogenous. By considering  product differentiation as a strategic variable, our  analysis sheds new light on the impact of trade barriers on  the decision to produce abroad and on the choice of product  range, in accordance with recent empirical evidence. We  show, even though technology exhibits the same productivity  for each variety, firms drop some of varieties with trade  integration. In addition, our results reveal that, contrary  to the standard theoretical literature, the relationship  between the decision to export and trade costs is  non-linear. When trade costs are relatively high, firms may  export and be multi-product. Finally, the choice of  producing abroad results from either a prisoner’s dilemma  game or a chicken game.},
      url = {http://ageconsearch.umn.edu/record/121117},
      doi = {https://doi.org/10.22004/ag.econ.121117},
}