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North-South competition, policy rivalry and profitability

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Author Info
Satya P. Das () (Indian Statistical Institute, New Delhi)
Subhadip Ghosh (Indian Statistical Institute, New Delhi)

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Abstract

In the strategic trade policy literature, the firms typically make positive profits at equilibrium policy levels. We show that this is not always true when firms from the developed (North) and developing (South) countries compete in the Northern market. In particular, the South firm may be pushed out of the Northern market. On the other hand, the Northern firm always maintains a market share in the South market in policy equilibrium. The critical assumption is that the Northern firms produce products of a superior quality than do their Southern counterparts.

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Publisher Info
Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 03-07.

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Length: 27 pages
Date of creation: Jun 2003
Date of revision:
Handle: RePEc:ind:isipdp:03-07

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Related research
Keywords: North-South trade; Vertically differentiated product; Strategic Trade Policy; Third market competion; Internal market competition;

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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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.:
  1. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February. [Downloadable!] (restricted)
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  2. Rosenkranz, Stephanie, 1995. "Innovation and cooperation under vertical product differentiation," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 1-22, March. [Downloadable!] (restricted)
  3. Das, Satya P. & Donnenfeld, Shabtai, 1989. "Oligopolistic competition and international trade : Quantity and quality restrictions," Journal of International Economics, Elsevier, vol. 27(3-4), pages 299-318, November. [Downloadable!] (restricted)
  4. Bond, Eric W., 1988. "Optimal commercial policy with quality-differentiated products," Journal of International Economics, Elsevier, vol. 25(3-4), pages 271-290, November. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
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  6. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, vol. 20(3), pages 340-359, June. [Downloadable!] (restricted)
  7. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Blackwell Publishing, vol. 49(1), pages 3-13, January. [Downloadable!] (restricted)
  8. Flam, Harry & Helpman, Elhanan, 1987. "Vertical Product Differentiation and North-South Trade," American Economic Review, American Economic Association, vol. 77(5), pages 810-22, December. [Downloadable!] (restricted)
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