Horizontal Regulatory Protection. Its appeal and implictions in a linear Cournot duopoly
AbstractI set up a linear model of a cross-hauling, Cournot duopoly. Even where countries are small, there exists a motive for protection to achieve a profit-shift and to raise revenue. Where the protection is of tariff form, then the protection will only totally exclude the foreign firm for a limited set of parameter values. By contrast, where the protection takes the form of a horizontal technical barrier to trade (HTBT), the government will always exclude the foreign firm. Where there is no constraint on imposing tariffs, these will always be preferred to the HTBT. However, if tariff reductions are imposed by international agreement without simultaneous restrictions on HTBTs, then reductions below a threshold level will trigger imposition of an HTBT sufficient to totally exclude the foreign firm.
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Bibliographic InfoPaper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2007_05.
Date of creation: Feb 2007
Date of revision: Feb 2007
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: Duopoly; trade; protection.;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F15 - International Economics - - Trade - - - Economic Integration
- C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
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