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Strategic trade policy : how new? how sensible?

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  • Corden, W. Max
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    Abstract

    This paper reviews some recent developments in the theory of trade policy that have to do with imperfect competition, strategic interactions as a result of oligopoly, and economies of scale. All these developments have been described as the"new international economics."In the view of some they represent major breakthroughs. One purpose of this paper is to examine how new some of this is and how it relates to the orthodox theory. The paper will focus on one major aspect of these developments, namely"Brander-Spencer profit sharing"and its policy implications. The conclusion is that it relates closely to the existing framework of the orthodox theory of trade policy.

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    Bibliographic Info

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 396.

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    Date of creation: 30 Apr 1990
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    Handle: RePEc:wbk:wbrwps:396

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    Keywords: Economic Theory&Research; Environmental Economics&Policies; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Trade Policy; General Technology;

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    References

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    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.
    2. Krugman, Paul R, 1987. "Is Free Trade Passe?," Journal of Economic Perspectives, American Economic Association, vol. 1(2), pages 131-44, Fall.
    3. Svedberg, Peter, 1979. "Optimal Tariff Policy on Imports from Multinationals," The Economic Record, The Economic Society of Australia, vol. 55(148), pages 64-67, March.
    4. Snape, Richard H, 1977. "Trade Policy in the Presence of Economies of Scale and Product Variety," The Economic Record, The Economic Society of Australia, vol. 53(144), pages 525-34, December.
    5. Stegemann, Klaus, 1989. "Policy rivalry among industrial states: what can we learn from models of strategic trade policy?," International Organization, Cambridge University Press, vol. 43(01), pages 73-100, December.
    6. Spencer, Barbara J & Brander, James A, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 707-22, October.
    7. T. N. Srinivasan, 1989. "Recent Theories of Imperfect Competition and International Trade: Any Implications for Development Strategy?," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 24(1), pages 1-23, July.
    8. 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.
    9. James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-89, August.
    10. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    11. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Papers 517, Queen's University, Department of Economics.
    12. Paul Krugman, 1986. "Strategic Trade Policy and the New International Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262610450, December.
    13. Katrak, Homi, 1977. "Multi-national Monopolies and Commercial Policy," Oxford Economic Papers, Oxford University Press, vol. 29(2), pages 283-91, July.
    14. Pursell, G. & Snape, R. H., 1973. "Economies of scale, price discrimination and exporting," Journal of International Economics, Elsevier, vol. 3(1), pages 85-91, February.
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    Cited by:
    1. Corbo, Vittorio & Fischer, Stanley, 1991. "Adjustment programs and Bank support : rationale and main results," Policy Research Working Paper Series 582, The World Bank.
    2. Douglas A. Irwin, 1990. "Free trade at risk? An historical perspective," International Finance Discussion Papers 391, Board of Governors of the Federal Reserve System (U.S.).
    3. Patrick Walsh, 1991. "A general framework for analysing endogenous trade divergences," LSE Research Online Documents on Economics 6780, London School of Economics and Political Science, LSE Library.
    4. Alam, Asad & DEC, 1994. "The new trade theory and its relevance for developing countries," Policy Research Working Paper Series 1274, The World Bank.

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