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Strategic Trade Policy with Internationally Owned Firms

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  • Welzel, Peter

Abstract

The consequences of international firm ownership for strategic trade policy are examined both in a general and in a simple linear model of an international duopoly with two governments using production subsidies as policy instruments. At first sight, the case for strategic trade policy seems to be weakened, because international ownership reduces a government's incentive for rent-shifting. Closer inspection shows, however, that there are ownership structures leading to optimal policies which induce the duopolists to behave more collusively. This tends to resolve the conflict between national and international rationality in a policy game with retaliation and makes strategic trade policy look more attractive. Copyright 1995 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Bulletin of Economic Research.

Volume (Year): 47 (1995)
Issue (Month): 3 (July)
Pages: 221-32

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Handle: RePEc:bla:buecrs:v:47:y:1995:i:3:p:221-32

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0307-3378

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Cited by:
  1. Steffen Huck & Kai A. Konrad, 2003. "Strategic Trade Policy and the Home Bias in Firm Ownership Structure," CESifo Working Paper Series 892, CESifo Group Munich.
  2. Gundlach, Erich & Klodt, Henning & Langhammer, Rolf J. & Soltwedel, Rüdiger, 1995. "Fairneß im Standortwettbewerb? Auf dem Weg zur internationalen Ordnungspolitik," Kiel Discussion Papers 254, Kiel Institute for the World Economy (IfW).
  3. Morasch, Karl, 2000. "Strategic alliances: a substitute for strategic trade policy?," Journal of International Economics, Elsevier, vol. 52(1), pages 37-67, October.

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