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Industry Concentration and Strategic Trade Policy in Successive Oligopoly

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  • 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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Bibliographic 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

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Handle: RePEc:kap:jincot:v:7:y:2007:i:1:p:31-52

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Web page: http://springerlink.metapress.com/link.asp?id=105724

Related research

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

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References

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Citations

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Cited by:
  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.
  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 Business and Management Science, Norwegian School of Economics.
  3. Michal Mravec, 2007. "Understanding the Lack of Competition in Natural Gas Markets: The Impact of Storage Ownership and Upstream Competition," CERGE-EI Working Papers wp342, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  4. Lommerud, Kjell Erik & Olsen, Trond E. & Straume, Odd Rune, 2006. "Cross border mergers and strategic trade policy with two-part taxation: is international policy coordination beneficial?," Discussion Papers, Research Unit: Market Processes and Governance SP II 2006-24, Social Science Research Center Berlin (WZB).

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