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Strategic Trade Policy, Spillovers, and the Uncertain Mode of

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  • Kresimir Zigic

    (CERGE-EI)

Abstract

In this paper we discuss the incentives of a welfare maximizing government to implement strategic trade policy when there is, on the one hand, uncertainty about the relevant market information (like the type of competition, demand function, cost function, etc.), but, on the other hand, the environment of the contest between the firms is specific: there are two firms and the interaction among them is accompanied by technological spillovers from the domestic firm to the foreign firm. The two bench mark oligopoly models -- Bertrand and Cournot -- are assumed to be possible types of market competition. In order to analyse the problem of strategic policy under uncertainty, it is first necessary to work out in depth the optimal tariff policy in perfect information setup for both the Cournot and the Bertrand case. We argue, then, that the "informational" criticism of strategic trade policy is less relevant than was previously thought.

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File URL: http://128.118.178.162/eps/io/papers/0012/0012008.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0012008.

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Length: 37 pages
Date of creation: 26 Feb 2001
Date of revision:
Handle: RePEc:wpa:wuwpio:0012008

Note: Type of Document - Acrobat PDF; pages: 37 ; figures: included
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Web page: http://128.118.178.162

Related research

Keywords: Optimal tariff; Bertrand and Cournot competition; Spillovers; Strategic trade; Government's informational constraints; Social welfare;

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References

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  2. Grossman, Gene M. & Helpman, Elhanan, 1995. "Technology and trade," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 25, pages 1279-1337 Elsevier.
  3. Helpman, E., 1992. "Innovation, Imitation and intellectual Property Rights," Harvard Institute of Economic Research Working Papers 1597, Harvard - Institute of Economic Research.
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  8. Henriques, Irene, 1990. "Cooperative and Noncooperative R&D in Duopoly with Spillovers: Comment," American Economic Review, American Economic Association, vol. 80(3), pages 638-40, June.
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  10. David T. Coe & Elhanan Helpman & Alexander Hoffmaister, 1995. "North-South R&D Spillovers," NBER Working Papers 5048, National Bureau of Economic Research, Inc.
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  17. Paul Krugman, 1986. "Strategic Trade Policy and the New International Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262610450, December.
  18. Mansfield, Edwin, 1985. "How Rapidly Does New Industrial Technology Leak Out?," Journal of Industrial Economics, Wiley Blackwell, vol. 34(2), pages 217-23, December.
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Cited by:
  1. Eberhard Feess & Gerd Muehlheusser, 2002. "Strategic Environmental Policy, Clean Technologies and the Learning Curve," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(2), pages 149-166, October.

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