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The Profits Of Firms And Countervailing Duties In Vertically Related Markets

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  • YU-TER WANG

    ()
    (Department of Economics, Ming Chuan University, Taiwan)

Abstract

This paper studies the relationship between the profits of firms and countervailing duties in vertically related markets characterized by oligopolies. It is shown that a countervailing duty equal to the foreign export subsidy is required to neutralize the impact of foreign export subsidies on the profits of domestic firms. The domestic country has an incentive to impose a countervailing duty on foreign final goods even though foreign governments only subsidize exports of intermediate goods. In addition, foreign exporting firms may benefit from a countervailing duty more than a foreign export subsidy.

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Bibliographic Info

Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal The Singapore Economic Review.

Volume (Year): 55 (2010)
Issue (Month): 04 ()
Pages: 749-756

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Handle: RePEc:wsi:serxxx:v:55:y:2010:i:04:p:749-756

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Related research

Keywords: Profits; countervailing duties; foreign export subsidies; vertically related markets; F12; F13; L13;

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References

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  1. Jota Ishikawa & Barbara J. Spencer, 1996. "Rent-Shifting Export Subsidies with an Imported Intermediate Product," NBER Working Papers 5458, National Bureau of Economic Research, Inc.
  2. Dixit, Avinash, 1988. "Anti-dumping and countervailing duties under oligopoly," European Economic Review, Elsevier, vol. 32(1), pages 55-68, January.
  3. Yu-ter Wang, 2008. "Product Differentiation: An Alternative To Cvds," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 513-517, 09.
  4. GianCarlo Moschini & Karl D. Meilke, 1992. "Production Subsidy and Countervailing Duties in Vertically Related Markets: The Hog-Pork Case Between Canada and the United States," Food and Agricultural Policy Research Institute (FAPRI) Publications 91-gatt6, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  5. Yu-Ter Wang, 2004. "Countervailing Duties, Foreign Export Subsidies and Import Tariffs," The Japanese Economic Review, Japanese Economic Association, vol. 55(2), pages 153-161.
  6. Kyle Bagwell & Robert W. Staiger, 2006. "Will International Rules on Subsidies Disrupt the World Trading System?," American Economic Review, American Economic Association, vol. 96(3), pages 877-895, June.
  7. Jones, R.W. & Spencer, B.J., 1989. "Trade And Protection In Vertically Related Markets," RCER Working Papers 195, University of Rochester - Center for Economic Research (RCER).
  8. Sykes, Alan O., 1996. "The economics of injury in antidumping and countervailing duty cases," International Review of Law and Economics, Elsevier, vol. 16(1), pages 5-26, March.
  9. Collie, David, 1994. "Strategic trade policy and retaliation," Japan and the World Economy, Elsevier, vol. 6(1), pages 75-88.
  10. Carter, Colin & Chadee, Doren & Darko, Kwame, 1999. "Are Subsidies to be Blamed? A Reexamination of U.S. Countervailing Duty on Hog Imports From Canada," Journal of Policy Modeling, Elsevier, vol. 21(7), pages 823-830, December.
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