Can Governments Reverse First-Mover Advantages of Foreign Competitors?
AbstractWe show that governments can use export subsidies to reduce or even reverse the first-mover advantages of foreign competitors. In particular, if the cost disadvantage of Stackelberg followers relatively to Stackelberg leaders is not too large, the export subsidy makes the former produce more than the latter. Welfare unambiguously increases in countries with Stackelberg followers and in consumer countries, but decreases in countries with Stackelberg leaders. In turn, depending on the relative difference in cost competitiveness between leaders and followers, welfare can either increase or decrease in the world economy.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 2 ()
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Export Subsidies; First-Mover Advantages; Asymmetric Competitiveness.;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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- 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.
- James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
- Neary, J Peter, 1991.
"Cost Asymmetries in International Subsidy Games: Should Governments Help Winners or Losers?,"
CEPR Discussion Papers
560, C.E.P.R. Discussion Papers.
- Neary, J. Peter, 1994. "Cost asymmetries in international subsidy games: Should governments help winners or losers?," Journal of International Economics, Elsevier, vol. 37(3-4), pages 197-218, November.
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