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Industry Concentration and Strategic Trade Policy in Successive Oligopoly

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Author Info
Gjermund Nese ()
Odd Straume ()
Abstract

We study a policy game between exporting and importing countries in vertically linked industries. In a successive international Cournot oligopoly, we analyse incentives for using tax instruments strategically to shift rents vertically, between exporting and importing countries, and horizontally, between exporting countries. We show that the equilibrium outcome depends crucially on the relative degree of competitiveness in the upstream and downstream parts of the industry. With respect to national welfare, a more competitive upstream industry may benefit an exporting (upstream) country and harm an importing (downstream) country. On the other hand, a more competitive downstream industry may harm exporting countries. Copyright Springer Science+Business Media, LLC 2007

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File URL: http://hdl.handle.net/10.1007/s10842-006-0001-7
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Publisher Info
Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 7 (2007)
Issue (Month): 1 (March)
Pages: 31-52
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:kap:expeco:v:7:y:2007:i:1:p:31-52

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Web page: http://www.springerlink.com/link.asp?id=102888

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Related research
Keywords: successive oligopoly; strategic trade policy; industry concentration; F12; F13; L13;

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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    Other versions:
  2. James Brander & Slobodan Djajic, 1983. "Rent-Extracting Tariffs and the Management of Exhaustible Resources," Canadian Journal of Economics, Canadian Economics Association, vol. 16(2), pages 288-98, May. [Downloadable!] (restricted)
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  3. Spencer, Barbara J. & Jones, Ronald W., 1992. "Trade and protection in vertically related markets," Journal of International Economics, Elsevier, vol. 32(1-2), pages 31-55, February. [Downloadable!] (restricted)
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  4. Simon Cowan, 1989. "Trade and Competition Policies for Oligopolies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 125(3), pages 464-483, September. [Downloadable!] (restricted)
  5. Spencer, Barbara J & Jones, Ronald W, 1991. "Vertical Foreclosure and International Trade Policy," Review of Economic Studies, Blackwell Publishing, vol. 58(1), pages 153-70, January. [Downloadable!] (restricted)
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  6. Horn, Henrik & Levinsohn, James, 2001. "Merger Policies and Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 111(470), pages 244-76, April. [Downloadable!] (restricted)
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  7. Richardson, Martin, 1999. "Trade and Competition Policies: Concordia Discors?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 649-64, October.
  8. Rolf Golombek & Eystein Gjelsvik & Knut Einar Rosendahl, 1998. "Increased Competition on the Supply Side of the Western European Natural Gas Market," The Energy Journal, International Association for Energy Economics, vol. 19(3), pages 1-18.
  9. Radetzki, Marian, 1999. "European natural gas: market forces will bring about competition in any case," Energy Policy, Elsevier, vol. 27(1), pages 17-24, January. [Downloadable!] (restricted)
  10. Ishikawa, Jota & Spencer, Barbara J., 1999. "Rent-shifting export subsidies with an imported intermediate product," Journal of International Economics, Elsevier, vol. 48(2), pages 199-232, August. [Downloadable!] (restricted)
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  11. Ted Bergstrom, 1982. "On Capturing Oil Rents with a National Excise Tax," University of California at Santa Barbara, Economics Working Paper Series 1982A, Department of Economics, UC Santa Barbara. [Downloadable!]
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  12. Steffen Huck & Kai A. Konrad, 2004. "Merger Profitability and Trade Policy," Scandinavian Journal of Economics, Blackwell Publishing, vol. 106(1), pages 107-122, 03. [Downloadable!] (restricted)
  13. Sajal Lahiri & Yoshiyasu Ono, 1999. "Optimal Tariffs in the Presence of Middlemen," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 55-70, February. [Downloadable!] (restricted)
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  14. Percebois, Jacques, 1999. "The gas deregulation process in Europe: economic and political approach," Energy Policy, Elsevier, vol. 27(1), pages 9-15, January. [Downloadable!] (restricted)
  15. Maroeska G. Boots & Fieke A.M. Rijkers & Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 25(3), pages 73-102.
  16. James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-89, August. [Downloadable!] (restricted)
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  17. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
  18. Pascalis Raimondos-Møller & Alan D. Woodland, 2000. "Tariff strategies and small open economies," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 25-40, February. [Downloadable!] (restricted)
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  19. Ishikawa, Jota & Lee, Ki-Dong, 1997. "Backfiring tariffs in vertically related markets," Journal of International Economics, Elsevier, vol. 42(3-4), pages 395-423, May. [Downloadable!] (restricted)
  20. Austvik, Ole Gunnar, 1997. "Gas pricing in a liberalized European market; will the rent be taxed away?," Energy Policy, Elsevier, vol. 25(12), pages 997-1012, October. [Downloadable!] (restricted)
  21. Salinger, Michael A, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 345-56, May. [Downloadable!] (restricted)
  22. Brander, James A. & Spencer, Barbara J., 1984. "Trade warfare: Tariffs and cartels," Journal of International Economics, Elsevier, vol. 16(3-4), pages 227-242, May. [Downloadable!] (restricted)
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  23. Bernhofen, Daniel M, 1997. "Strategic Trade Policy in a Vertically Related Industry," Review of International Economics, Blackwell Publishing, vol. 5(3), pages 429-33, August.
  24. Conrad Klaus, 1993. "Taxes and Subsidies for Pollution-Intensive Industries as Trade Policy," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 121-135, September. [Downloadable!] (restricted)
  25. Hillman, Arye L & Templeman, Joseph, 1985. "On the Use of Trade Policy Measures by a Small Country to Counter Foreign Monopoly Power," Oxford Economic Papers, Oxford University Press, vol. 37(2), pages 346-52, June. [Downloadable!] (restricted)
  26. Ziss, Steffen, 1997. "Strategic Trade Policy and Vertical Structure," Review of International Economics, Blackwell Publishing, vol. 5(1), pages 142-52, February.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Reza Oladi & John Gilbert, 2009. "Buyer and Seller Concentration in Global Commodity Markets," Working Papers 200911, Utah State University, Department of Economics, revised 15 Sep 2009. [Downloadable!]
  2. Lommerud, Kjell Erik & Olsen, Trond E. & Straume, Odd Rune, 2005. "Access regulation and cross-border mergers: Is international coordination beneficial?," Discussion Papers 2005/8, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
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This page was last updated on 2009-11-7.

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