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Vertical Foreclosure and International Trade Policy

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Author Info
Spencer, Barbara J
Jones, Ronald W

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Abstract

International differences in the cost of production of a key intermediate product can mean that a domestic firm is dependent on supplies from a foreign vertically integrated firm. This paper considers the incentives for the foreign firm and foreign country to supply the domestic firm when the firms compete in a Cournot or Bertrand market for the final product. The vertical supply decision is significantly affected by domestic supply conditions for the input and a domestic tariff on final product imports. Optimal policy by the exporting country may require a tax on both exports or a subsidy on both exports. Copyright 1991 by The Review of Economic Studies Limited.

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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Economic Studies.

Volume (Year): 58 (1991)
Issue (Month): 1 (January)
Pages: 153-70
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Handle: RePEc:bla:restud:v:58:y:1991:i:1:p:153-70

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dixit, Avinash, 1983. "Vertical integration in a monopolistically competitive industry," International Journal of Industrial Organization, Elsevier, vol. 1(1), pages 63-78, March. [Downloadable!] (restricted)
  2. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-71, May. [Downloadable!] (restricted)
  3. Avinash K. Dixit & Gene M. Grossman, 1987. "Targeted Export Promotion with Several Oligopolistic Industries," NBER Working Papers 1344, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February. [Downloadable!] (restricted)
    Other versions:
  5. Spencer, Barbara J & Brander, James A, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Blackwell Publishing, vol. 50(4), pages 707-22, October. [Downloadable!] (restricted)
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  6. Eaton, Jonathan & Grossman, Gene M, 1986. "Optimal Trade and Industrial Policy under Oligopoly," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 383-406, May. [Downloadable!] (restricted)
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  7. Salop, Steven C & Scheffman, David T, 1987. "Cost-Raising Strategies," Journal of Industrial Economics, Blackwell Publishing, vol. 36(1), pages 19-34, September. [Downloadable!] (restricted)
  8. Venables, Anthony J., 1985. "Trade and trade policy with imperfect competition: The case of identical products and free entry," Journal of International Economics, Elsevier, vol. 19(1-2), pages 1-19, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. G. Rossini & L. Lambertini, 2003. "Endogeneous outsourcing and vertical integration with process R&D," Working Papers 487, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  2. Dani Rodrik & Chang-Ho Yoon, 1989. "Strategic Trade Policy When Domestic Firms Compete Against Vertically Integrated Rivals," NBER Working Papers 2916, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Arunanondchai, May, 2001. "Can Indonesia Gain from Log Export Barriers?," The Warwick Economics Research Paper Series (TWERPS) 619, University of Warwick, Department of Economics. [Downloadable!]
  4. Stiegert, Kyle W. & Wang, Shinn-Shyr, 2003. "Imperfect Competition And Strategic Trade Theory: What Have We Learned," Working Papers 14589, International Agricultural Trade Research Consortium. [Downloadable!]
  5. Yongmin Chen & Jota Ishikawa & Zhihao Yu, 2002. "Trade Liberalization and Strategic Outsourcing," Carleton Economic Papers 02-12, Carleton University, Department of Economics. [Downloadable!]
    Other versions:
  6. Hamilton, Stephan F. & Requate, Till, 2001. "Vertical Structure and Strategic Environmental Trade Policy," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  7. Eric W. Bond, 2001. "Commercial Policy in a "Fragmented" World," American Economic Review, American Economic Association, vol. 91(2), pages 358-362, May. [Downloadable!] (restricted)
  8. Gjermund Nese & Odd Straume, 2007. "Industry Concentration and Strategic Trade Policy in Successive Oligopoly," Journal of Industry, Competition and Trade, Springer, vol. 7(1), pages 31-52, March. [Downloadable!] (restricted)
  9. Lionel Fontagne, 1995. "Why NAFTA Might Be Discriminatory," Working Papers 1995-12, CEPII research center. [Downloadable!]
  10. Horst Raff & Nicolas Schmitt, 2009. "Buyer Power in International Markets," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  11. G. Rossini, 2005. "Pitfalls in private and social incentives of vertical crossborder outsourcing," Working Papers 536, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  12. John McLaren, 2000. ""Globalization" and Vertical Structure," American Economic Review, American Economic Association, vol. 90(5), pages 1239-1254, December. [Downloadable!] (restricted)
  13. Winand Emons, 1994. "Market power, uncertainty, and the level of trade," Open Economies Review, Springer, vol. 5(3), pages 261-274, July. [Downloadable!] (restricted)
    Other versions:
  14. Gjermund Nese & Odd Rune Staume, 2005. "Industry Concentration and Strategic Trade Policy in Successive Oligopoly," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  15. Gjermund Nese & Odd Straume, 2007. "Industry Concentration and Strategic Trade Policy in Successive Oligopoly," Experimental Economics, Springer, vol. 7(1), pages 31-52, March. [Downloadable!] (restricted)
  16. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics. [Downloadable!]
  17. Ronald W. Jones, 2000. "Private Interests and Government Policy in a Global World," Tinbergen Institute Discussion Papers 00-051/2, Tinbergen Institute. [Downloadable!]
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