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Information and Disclosure in Strategic Trade Policy

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  • Anthony Creane
  • Kaz Miyagiwa

Abstract

We relax the standard assumption in the strategic trade policy literature that governments possess complete information about the economy. Assuming instead that governments must obtain information from firms, we examine firms' incentive to disclose information to the governments in the Brander-Spencer setting. With quantity competition, we find firms disclosing both demand and cost information, thereby justifying the literature's omniscient-government assumption. With price competition, however, firms have no incentives to disclose demand or cost information, so governments remain uninformed. Further, with quantity competition and unknown demand, governments are caught in an informational prisoner's dilemma.

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Bibliographic Info

Paper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0705.

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Date of creation: Dec 2007
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Handle: RePEc:dpr:wpaper:0705

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  1. Eaton, Jonathan & Grossman, Gene M, 1986. "Optimal Trade and Industrial Policy under Oligopoly," The Quarterly Journal of Economics, MIT Press, vol. 101(2), pages 383-406, May.
  2. Sajal Lahiri and Yoshiyasu Ono, . "Asymmetric Oligopoly, International Trade, and Welfare: Synthesis," Economics Discussion Papers 435, University of Essex, Department of Economics.
  3. Maggi, Giovanni, 1998. "A Note on "Strategic Trade Policy Design with Asymmetric Information and Public Contracts."," Review of Economic Studies, Wiley Blackwell, vol. 65(3), pages 623-25, July.
  4. Maggi, G., 1997. "Strategic Trade Policy Under Incomplete Information," Papers 189, Princeton, Woodrow Wilson School - Public and International Affairs.
  5. Okajima, Yoshitomo, 2003. "A note on 'optimal strategic trade policy under asymmetric information'," Journal of International Economics, Elsevier, vol. 61(1), pages 243-246, October.
  6. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455 Elsevier.
  7. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-40, December.
  8. Anthony Creane & Kaz Miyagiwa, 2007. "Information and Disclosure in Strategic Trade Policy," ISER Discussion Paper 0705, Institute of Social and Economic Research, Osaka University.
  9. Brainard, S Lael & Martimort, David, 1996. "Strategic Trade Policy Design with Asymmetric Information and Public Contracts," Review of Economic Studies, Wiley Blackwell, vol. 63(1), pages 81-105, January.
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Cited by:
  1. Liviu-George Maha & Andreea-Nicoleta Donici & Andreea Maha, 2012. "Limits And Difficulties In Implementing The Strategic Trade Policy," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4, pages 736-746, December.
  2. Mizuno, Tomomichi & Takauchi, Kazuhiro, 2013. "Rules of origin and uncertain cost of compliance," MPRA Paper 44431, University Library of Munich, Germany.
  3. Fabio Antoniou & Phoebe Koundouri & Nikos Tsakiris, . "Information Disclosure Under Different Modes of Regulation," DEOS Working Papers 1015, Athens University of Economics and Business.
  4. Antoniou, Fabio & Tsakiris, Nikos, 2011. "Information and disclosure in strategic trade policy: Revisited," MPRA Paper 32949, University Library of Munich, Germany.
  5. Bou√ęt, Antoine & Cassagnard, Patrice, 2013. "Strategic trade policy under asymmetric information with screening," Economic Modelling, Elsevier, vol. 32(C), pages 286-293.
  6. Creane, Anthony & Miyagiwa, Kaz, 2008. "Information and disclosure in strategic trade policy," Journal of International Economics, Elsevier, vol. 75(1), pages 229-244, May.
  7. Anthony Creane & Kaz Miyagiwa, 2009. "Foreign Direct Investment and the Welfare Effects of Cost Harmonization," Emory Economics 0905, Department of Economics, Emory University (Atlanta).
  8. Amir, Rabah & Jin, Jim Y. & Troege, Michael, 2010. "Robust results on the sharing of firm-specific information: Incentives and welfare effects," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 855-866, September.
  9. Anthony Creane & Kaz Miyagiwa, 2007. "Export, Foreign Direct Investment, and Joint Ventures: Learning the Rival's Costs through Propinquity," Emory Economics 0710, Department of Economics, Emory University (Atlanta).

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