Advanced Search
MyIDEAS: Login to save this paper or follow this series

Trade and Industrial Policy of Transition Economies

Contents:

Author Info

  • José Luis Moraga Gonzales
  • Jean-Marie Viaene

Abstract

Trade reforms in transition economies are analyzed in a model of trade and vertical product differentiation. We first show that trade liberalization in transition economies reduces the local firm’s output and raises the prices of all variants. Second, we find that neither free trade nor the absence of a subsidy are optimal. Third, there exists a rationale for a government commitment to use socially optimal trade and industrial policies to release the domestic firm from low-quality production. Finally, we establish an equivalence result between the effects of exchange rate changes and those of trade policy on price competition (but not on social welfare).

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2001/wp-cesifo-2001-03/cesifo_wp446.pdf
Download Restriction: no

Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 446.

as in new window
Length:
Date of creation: 2001
Date of revision:
Handle: RePEc:ces:ceswps:_446

Contact details of provider:
Postal: Poschingerstrasse 5, 81679 Munich
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Email:
Web page: http://www.cesifo.de
More information through EDIRC

Related research

Keywords: Exchange rates; leapfrogging; optimal trade policy; product quality; trade liberalization;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Collie, David, 1991. "Export subsidies and countervailing tariffs," Journal of International Economics, Elsevier, Elsevier, vol. 31(3-4), pages 309-324, November.
  2. Kevin M. Murphy & Andrei Shleifer, 1991. "Quality and Trade," NBER Working Papers 3622, National Bureau of Economic Research, Inc.
  3. Massimo MOTTA & Jean-François THISSE & Antonio CABRALES, 1996. "On the Persistence of Leadership or Leapfrogging in International Trade," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP), Université de Lausanne, Faculté des HEC, DEEP 9625, Université de Lausanne, Faculté des HEC, DEEP.
  4. James A. Brander & Barbara J. Spencer, 1983. "Trade Warfare: Tariffs and Cartels," NBER Working Papers 1193, National Bureau of Economic Research, Inc.
  5. Lloyd A. Metzler, 1949. "Tariffs, the Terms of Trade, and the Distribution of National Income," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 57, pages 1.
  6. Ulrich Lehmann-Grube, 1997. "Strategic Choice of Quality When Quality is Costly: The Persistence of the High-Quality Advantage," RAND Journal of Economics, The RAND Corporation, vol. 28(2), pages 372-384, Summer.
  7. Emmanuel Petrakis & Santanu Roy, 1998. "Cost Reducing Investment, Competition and Industry Dynamics," Tinbergen Institute Discussion Papers, Tinbergen Institute 98-011/1, Tinbergen Institute.
  8. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 41(2), pages 113-31, June.
  9. Blanchard, O & Kremer, M, 1996. "Disorganization," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 96-30, Massachusetts Institute of Technology (MIT), Department of Economics.
  10. Cabrales, Antonio & Garcia-Fontes, Walter & Motta, Massimo, 2000. "Risk dominance selects the leader: An experimental analysis," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(1), pages 137-162, January.
  11. Fershtman, Chaim & Gandal, Neil & Markovich, Sarit, 1999. "Estimating the Effects of Tax Reform in Differentiated Product Oligopolistic Markets," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2107, C.E.P.R. Discussion Papers.
  12. Crampes, C. & Hollander, A., 1991. "Duopoly and Quality Standards," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 9128, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  13. Kyle Bagwell & Robert W. Staiger, 1997. "An Economic Theory of GATT," NBER Working Papers 6049, National Bureau of Economic Research, Inc.
  14. Lankhuizen, Maureen, 2000. "Shifts in foreign trade, competitiveness and growth potential: from Baltics to 'Bal-techs'?," Research Policy, Elsevier, Elsevier, vol. 29(1), pages 9-29, January.
  15. Chonira Aturupane & Simeon Djankov & Bernard Hoekman, 1999. "Horizontal and vertical intra-industry trade between Eastern Europe and the European union," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 135(1), pages 62-81, March.
  16. CREMER, Helmut & THISSE, Jacques-François, 1992. "Commodity taxation in a differentiated oligopoly," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 1992035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Das, Satya P. & Donnenfeld, Shabtai, 1989. "Oligopolistic competition and international trade : Quantity and quality restrictions," Journal of International Economics, Elsevier, Elsevier, vol. 27(3-4), pages 299-318, November.
  18. GABSZEWICZ, Jean J. & THISSE, Jacques-François, . "On the nature of competition with differentiated products," CORE Discussion Papers RP, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) -685, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  19. Feenstra, Robert C., 1989. "Symmetric pass-through of tariffs and exchange rates under imperfect competition: An empirical test," Journal of International Economics, Elsevier, Elsevier, vol. 27(1-2), pages 25-45, August.
  20. Krishna, Kala, 1987. "Tariffs versus quotas with endogenous quality," Journal of International Economics, Elsevier, Elsevier, vol. 23(1-2), pages 97-112, August.
  21. Leahy, Dermot & Neary, J Peter, 1999. "Learning by Doing, Precommitment and Infant-Industry Promotion," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 66(2), pages 447-74, April.
  22. Reitzes, James D, 1992. "Quality Choice, Trade Policy, and Firm Incentives," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(4), pages 817-35, November.
  23. Analysis, A Welfare & Das, Satya P. & Donnenfeld, Shabtai, 1987. "Trade policy and its impact on quality of imports," Journal of International Economics, Elsevier, Elsevier, vol. 23(1-2), pages 77-95, August.
  24. John C. Harsanyi & Reinhard Selten, 1988. "A General Theory of Equilibrium Selection in Games," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 0262582384, December.
  25. Shaked, Avner & Sutton, John, 1983. "Natural Oligopolies," Econometrica, Econometric Society, Econometric Society, vol. 51(5), pages 1469-83, September.
  26. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  27. Herguera, Inigo & Kujal, Praveen & Petrakis, Emmanuel, 2000. "Quantity restrictions and endogenous quality choice," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(8), pages 1259-1277, December.
  28. John C. Ries, 1993. "Voluntary Export Restraints, Profits, and Quality Adjustment," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 26(3), pages 688-706, August.
  29. Bennett, John & Estrin, Saul & Hare, Paul, 1999. "Output and Exports in Transition Economies: A Labor Management Model," Journal of Comparative Economics, Elsevier, vol. 27(2), pages 295-317, June.
  30. Brenton, Paul & Gros, Daniel, 1997. "Trade Reorientation and Recovery in Transition Economies," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 13(2), pages 65-76, Summer.
  31. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, Elsevier, vol. 18(2), pages 301-317, August.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Moraga-Gonzalez, Jose Luis & Jean-Marie Viaene, 2002. "Procompetitive Trade Policies," Royal Economic Society Annual Conference 2002, Royal Economic Society 141, Royal Economic Society.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_446. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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