Incompletely informed policymakers and trade policy in oligopolistic industries
AbstractWe study strategic trade policy design when governments are incompletely informed about the market demand. Two symmetric, homogeneous product Cournot firms, one in each country, compete in a third country market. Contrary to what common sense would suggest, we show that if governments are less informed on the stochastic market demand both countries will be better off. Also contrary to findings in the literature, we show that when the government is partially informed, although quantity controls would be optimal for both high and low levels of demand uncertainty, subsidies are preferred for intermediate levels. Copyright Blackwell Publishing Ltd and The Victoria University of Manchester, 2004.
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Bibliographic InfoArticle provided by University of Manchester in its journal The Manchester School.
Volume (Year): 72 (2004)
Issue (Month): 3 (06)
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Other versions of this item:
- Mustafa Caglayan & Murat Usman, 2003. "Incompletely Informed Policymakers and Trade Policy in Oligopolistic Industries," Research Papers 2003_06, University of Liverpool Management School.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
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