Uncertainty and the Choice of Trade Policy in Oligopolistic Industrie s
AbstractThis paper investigates the design of trade policies in an uncertain world. Governments in two countries select between direct quantity controls and subsidies in an attempt to shift profits in favor of domestic, imperfectly competitive firms. The equilibrium of this policy game depends on the variability of the environment. In a world of certainty, both governments choose to regulate their firms through direct quantity controls. With a sufficient amount of uncertainty, both governments regulate their firms through subsidies. This result reflects an important tradeoff between the strategic advantages of direct quantity controls and flexibility gained by the use of subsidies. Copyright 1989 by The Review of Economic Studies Limited.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of Economic Studies.
Volume (Year): 56 (1989)
Issue (Month): 1 (January)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527
Other versions of this item:
- Cooper, R. & Riezman, R., 1988. "Uncertainty And The Choice Of Trade Policy In Oligopolistic Industries," Working Papers e-88-16, Hoover Institution, Stanford University.
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- Gerda Dewit & Dermot Leahy, 2001. "Rivalry In Uncertain Export Markets: Commitment Versus Flexibility," Economics, Finance and Accounting Department Working Paper Series n1050201, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
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- Garcia Pires, Armando José, 2006. "Losers, Winners and Prisoner's Dilemma in International Subsidy Wars," CEPR Discussion Papers 5979, C.E.P.R. Discussion Papers.
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