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Domestic Welfare Effects of Foreign Strategic Trade Policies

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Author Info

  • Kohler, Philippe

    ()
    (Institut d’Etudes Politiques de Paris)

  • O. Moore, Michael

    ()
    (The George Washington University)

Abstract

Within 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 Info

Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 18 (2003)
Issue (Month): ()
Pages: 573-586

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Handle: RePEc:ris:integr:0249

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Web page: http://econo.sejong.ac.kr/
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Related research

Keywords: Dumping; Laissez-faire policy; Strategic trade policy;

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Cited by:
  1. Mihir A. Desai & James R. Hines Jr., 2004. "Market Reactions to Export Subsidies," NBER Working Papers 10233, National Bureau of Economic Research, Inc.
  2. repec:wii:bpaper:bowp:057 is not listed on IDEAS

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