Multiproduct competition in a North-South model with technological differences

This paper examines multiproduct competition in a simple North-South model with technological differences. I mainly focus on strategic decisions on the product scope in the global economy. I find that there are several different types of equilibria depending on technological differences and relative cost advantage of the Northern and Southern firms. When each firm has local cost advantage and technological difference between firms is sufficiently large, firms reallocate resources toward their more profitable products. By contrast, when there exists a small technological difference or global cost advantage, the more productive firm may expand the product line.