Domestic Welfare Effects of Foreign Strategic Trade Policies
AbstractWithin a duopoly strategic trade policy model, we analyze the effect of foreign strategic trade policies on domestic welfare when the domestic government pursues a laissez-faire import policy. With Cournot competition and domestic production and consumption, an increase in the foreign strategic export subsidy increases domestic welfare when the domestic price exceeds the foreign firm marginal cost. With Bertrand competition, an increase in the foreign strategic export tax has ambiguous effects on domestic welfare and depends on the degree of product differentiation and domestic cross-price elasticity of demand between domestic and foreign goods.
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Bibliographic InfoArticle provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.
Volume (Year): 18 (2003)
Issue (Month): ()
Dumping; Laissez-faire policy; Strategic trade policy;
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- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
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- Desai, Mihir A. & Hines Jr., James R., 2008.
"Market reactions to export subsidies,"
Journal of International Economics,
Elsevier, vol. 74(2), pages 459-474, March.
- Philippe Kohler, 2004. "The Welfare Cost of Tariff Protection in the Balkan Countries," The wiiw Balkan Observatory Working Papers 057, The Vienna Institute for International Economic Studies, wiiw.
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