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Trade Policies and Outsourcing for Market Dominance

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  • Chen, Yao-Tung

    ()
    (Ming Chuan University)

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    Abstract

    This paper attempts to analyze the effect of trade policies on the prices of both final and intermediate goods, when outsourcing part of production is a means used to obtain the market dominance in the host country. The market dominance could be granted by the host country to a foreign firm as a reward for its transferring of technology through outsourcing. It is found that when the subsidy by the host country on the production of intermediate inputs is substantial and if the demand curve is concave, a reduction in tariff on the final goods would lead to a rise in the price of both the final and intermediate goods. Consequently, this produces an anti-competitive result.

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    Bibliographic Info

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

    Volume (Year): 22 (2007)
    Issue (Month): ()
    Pages: 382-396

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    Handle: RePEc:ris:integr:0399

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

    Keywords: Outsourcing; Cournot duopoly; Market dominance;

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