NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Market Access and International Competition: A Simulation Study of 16K Random Access Memories

Richard E. Baldwin, Paul Krugman

NBER Working Paper No. 1936
Issued in May 1986
NBER Program(s):   ITI   IFM

This paper develops a model of international competition in an

oligopoly characterized by strong learning effects. The model is

quantified by calibrating its parameters to reproduce the US-Japanese

rivalry in 16K R.A.Ms from 1978-1983. We then ask the following question:

how much did the apparent closure of the Japanese market to imports

affect Japan's export performance? A simulation analysis suggests that a

protected home market was a crucial advantage to Japanese firms, which

would otherwise have been uncompetitive both at home and abroad. We

find, however, that Japan's home market protection nonetheless produced

more costs than benefits for Japan.

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Document Object Identifier (DOI): 10.3386/w1936

Published: in Empirical Methods for International Trade, (ed)R. Feenstra. MIT Press, 1987.

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