IDEAS home Printed from https://ideas.repec.org/a/kea/keappr/ker-199906-15-1-07.html
   My bibliography  Save this article

Optimal Trade Policy under Bertrand Competition and Incomplete Information

Author

Listed:
  • Young-Han Kim

    (Hankuk University of Foreign Studies)

Abstract

This paper examines the optimal export policy under incomplete information. In the model considered, foreign consumers do not know the product quality of the domestic ï¬ rm, which competes with the incumbent ï¬ rm in the foreign market. Conditions are derived under which the game has a unique intuitive separating equilibrium in which an exporter can credibly signal its quality. We demonstrate that the welfare eflect of the trade policy depends on two factors: the informational externality-reducing eflect, and the strategic eflect. When the product diï¬ erentiation and the quality variance is large, the optimal trade policy is an export subsidy, which reduces the upward price distortion. Otherwise, the optimal policy is an export tax for strategic reasons.

Suggested Citation

  • Young-Han Kim, 1999. "Optimal Trade Policy under Bertrand Competition and Incomplete Information," Korean Economic Review, Korean Economic Association, vol. 15, pages 123-146.
    • Handle: RePEc:kea:keappr:ker-199906-15-1-07
    as

    Download full text from publisher

    File URL: http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-199906-15-1-07.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    International Trade Policy; Incomplete Information; Bertrand Competition;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kea:keappr:ker-199906-15-1-07. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: KEA (email available below). General contact details of provider: https://edirc.repec.org/data/keaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.