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The Welfare Effects of Imperfect Harmonisation of Trade and Industrial Policy

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  • Gatsios, Konstantine
  • Karp, Larry

Abstract

Partial cooperation in setting trade and industrial policies may not benefit members of a customs union if exporters outside the union react aggressively. Even if the union comprises the entire noncompetitive sector of industry, cooperation on trade policy may be disadvantageous if industrial policy (e.g., investment subsidies) are chosen noncooperatively; cooperation in trade policy may exacerbate the inefficiencies created by noncooperation in investment. Cooperation in choosing trade policies may also encourage investment by competitive importers and, thus, reduce the demand faced by the oligopolists; this may more than offset the ex post benefits of cooperation. Copyright 1992 by Royal Economic Society.

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 102 (1992)
Issue (Month): 410 (January)
Pages: 107-16

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Handle: RePEc:ecj:econjl:v:102:y:1992:i:410:p:107-16

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Cited by:
  1. Karp, Larry, 1995. "Monopoly Power can be Disadvantageous in the Extraction of a Durable Nonrenewable Resource," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4cs0m1vb, Department of Agricultural & Resource Economics, UC Berkeley.
  2. Rothschild, R. & Heywood, John S. & Monaco, Kristen, 2000. "Spatial price discrimination and the merger paradox," Regional Science and Urban Economics, Elsevier, vol. 30(5), pages 491-506, September.
  3. Huizinga, Harry & Nielsen, Søren Bo, 2005. "Capital Income Tax Coordination and the Income Tax Mix," Working Papers 24-2005, Copenhagen Business School, Department of Economics.
  4. Conconi, P., 2000. "Trade Bloc Formation Under Imperfect Competition," The Warwick Economics Research Paper Series (TWERPS) 571, University of Warwick, Department of Economics.

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