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Choice of trade policy for international oligopoly with incomplete information

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  • Ning, Haokai

Abstract

This paper studies the design of trade policies in an uncertain third market with incomplete information. Governments in each of the two countries select either direct quantity controls or export subsidies in an attempt to shift profits in favor of their firms in an international oligopolistic setting. It is shown that the country with firms having an information disadvantage tends to choose direct quantity control, while the country with well-informed firms would use export subsidy (export quota, respectively) when the degree of uncertainty is sufficiently high (low, respectively).

Suggested Citation

  • Ning, Haokai, 2023. "Choice of trade policy for international oligopoly with incomplete information," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 1432-1443.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:1432-1443
    DOI: 10.1016/j.iref.2023.07.025
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    More about this item

    Keywords

    Strategic trade policy; Uncertainty; Incomplete information; Cournot competition;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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