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Competition Policy as Strategic Trade with Differentiated Products

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  • Martino De Stefano
  • Marc Rysman

Abstract

The paper analyzes how countries use competition policy as a tool for strategic trade. In the model, two countries export to a third country. Each exporting country is endowed with a set of differentiated products. Each government chooses the number of exporters for its country and the products that each exporter sells in the first period, and a tax policy in the second period. Firms choose prices or quantities independently in the third period. In the unique subgame-perfect equilibrium, both countries group all their products within a single firm-the "national champion policy." We study the implication of different assumptions about the timing of the game. Copyright � 2010 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 18 (2010)
Issue (Month): 4 (09)
Pages: 758-771

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Handle: RePEc:bla:reviec:v:18:y:2010:i:4:p:758-771

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