Advanced Search
MyIDEAS: Login

Non-credible policies and leap-frogging in a vertically differentiated industry

Contents:

Author Info

  • Herguera, Iñigo
  • Kujal, Praveen
  • Petrakis, Emmanuel

Abstract

In a vertically differentiated duopoly, where firms first choose quality and then compete in quantities, it is shown that optimal time consistent subsidies and tariffs are always positive. Time consistent subsidies result in domestic monopolies as the foreign firm exits the market. Domestic welfare is greater if the government can precommitment to a subsidy. Time consistent tariffs ensure that the domestic firm always produces the high quality good. Optimal tariffs are always higher under precommitment. Contrary to subsidies, under tariffs non-commital on the part of the domestic government is welfare improving, and domestic welfare is always greater than under both free trade and subsidies.

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://e-archivo.uc3m.es/bitstream/10016/6067/1/we977339.PDF
Download Restriction: no

Bibliographic Info

Paper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/6067.

as in new window
Length:
Date of creation:
Date of revision:
Handle: RePEc:ner:carlos:info:hdl:10016/6067

Contact details of provider:
Web page: http://www.uc3m.es

Related research

Keywords: Vertical differentiation; Non-credible policies; Commitment; Tariffs subsidies;

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. D Leahy & J.P. Neary, 1995. "Learning by Doing," CEP Discussion Papers dp0251, Centre for Economic Performance, LSE.
  2. Leahy, Dermot & Neary, J Peter, 1996. "International R&D Rivalry and Industrial Strategy without Government Commitment," Review of International Economics, Wiley Blackwell, vol. 4(3), pages 322-38, October.
  3. Herguera, Iñigo & Kujal, Praveen & Petrakis, E., 2000. "Quantity Restrictions and Endogenous Quality Choice," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/5333, Universidad Carlos III de Madrid.
  4. Kala Krishna, 1988. "Tariffs vs. Quotas with Endogenous Quality," NBER Working Papers 1535, National Bureau of Economic Research, Inc.
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. Herguera, Iñigo & Kujal, Praveen & Petrakis, E., 2000. "Quantity Restrictions and Endogenous Quality Choice," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/5333, Universidad Carlos III de Madrid.
  2. Praveen Kujal & Juan Ruiz, 2003. "International Trade Policy towards Monopolies and Oligopolies," International Trade 0302002, EconWPA, revised 17 Mar 2003.
  3. Herguera, Inigo & Kujal, Praveen & Petrakis, Emmanuel, 2002. "Tariffs, quality reversals and exit in vertically differentiated industries," Journal of International Economics, Elsevier, vol. 58(2), pages 467-492, December.
  4. Kujal, Praveen & Costa Cabral, Celia, . "The role of commitment and the choice of trade policy instruments," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/6166, Universidad Carlos III de Madrid.

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:ner:carlos:info:hdl:10016/6067

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

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.