The paper examines a motive for R&D cooperation with a rival by considering the behavior of a quality follower in a model of vertically differentiated products. We show that, in some settings, a quality follower has an incentive to contribute money to R&D activity of a quality leader with the sole purpose of making the […]

In this paper, we construct a simple model to show why similar countries can trade with each other for the same good when product quality can be selected by firms. Specifically, we devise a model that shows when trade expands a market, firms will build higher quality into their goods that benefits the whole region. […]

In this paper, we tested if country similarity positively affects the index of vertical intra-industry trade share (VIIT), given that the lower developed country is bigger in size. By using the trade data of the cosmetic industry in China, we found that VIIT is higher when China trades with a country similar in size or […]