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Second-mover advantage under strategic subsidy policy in a third market model

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  • Kojun Hamada

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    (Faculty of Economics, Niigata University)

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    Abstract

    This paper examines which of the Stackelberg leader or its follower has the advantage under strategic subsidy policy in a third market model. We show that even if governments choose export subsidies in whichever of a simultaneous-move or sequential-move game, the leader firm always loses its first-mover advantage in a Stackelberg duopoly. Furthermore, we examine the endogenous timing of subsidies by governments and show that the second-mover advantage occurs with regard to profit and welfare under the endogenous timing of subsidies.

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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I1-P42.pdf
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    Bibliographic Info

    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 29 (2009)
    Issue (Month): 1 ()
    Pages: 407-415

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    Handle: RePEc:ebl:ecbull:eb-08f10017

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    Related research

    Keywords: Stackelberg competition;

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    1. Orlando I. Balboa & Andrew F. Daughety & Jennifer F. Reinganum, 2001. "Market Structure and the Demand for Free Trade," Vanderbilt University Department of Economics Working Papers, Vanderbilt University Department of Economics 0112, Vanderbilt University Department of Economics, revised Dec 2002.
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