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International Trade Policy towards Monopolies and Oligopolies

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Author Info
Praveen Kujal (Universidad Carlos III de Madrid)
Juan Ruiz (Universidad Carlos III de Madrid)

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Abstract

We study the effect of market structure upon international trade policy when firms invest in process R&D before competing in a differentiated goods market. For a domestic monopoly, and increasing the number of foreign firms, the government either chooses a R&D (and output) subsidy, or remains inactive. For a domestic duopoly a government taxes, subsidizes, or does not promote R&D depending upon the number of domestic firms and the degree of product differentiation. R&D (and output) is taxed for high levels of product differentiation. For lower levels of product differentiation only one country may subsidize in equilibrium. Further, the results are robust to Cournot or Bertrand competition.

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File URL: http://129.3.20.41/eps/it/papers/0302/0302002.pdf
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Publisher Info
Paper provided by EconWPA in its series International Trade with number 0302002.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 20 pages
Date of creation: 04 Feb 2003
Date of revision: 17 Mar 2003
Handle: RePEc:wpa:wuwpit:0302002

Note: Type of Document - pdf file; prepared on Scientific Workplace; to print on any printer; pages: 20 ; figures: included in text
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Web page: http://129.3.20.41

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Related research
Keywords: Product Differentiation; Strategic Trade Policy; Policy Reversals; R&D subsidies; monopoly; duopoly.;

Other versions of this item:

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
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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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.:
  1. Celia Coasta Cabral & Praveen Kujal & Emmanuel Petrakis, 1998. "Incentives for Cost Reducing Innovations under Quantitative Import Restraints," Annales d'Economie et de Statistique, ADRES, issue 49-50, pages 19, Janvier-J. [Downloadable!]
  2. 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)
    Other versions:
  3. Barbara J. Spencer & James A. Brander, 1982. "Tariff Protection and Imperfect Competition," Working Papers 517, Queen's University, Department of Economics.
  4. Reitzes, James D, 1991. "The Impact of Quotas and Tariffs on Strategic R&D Behavior," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(4), pages 985-1007, November. [Downloadable!] (restricted)
  5. Bagwell, Kyle & Staiger, Robert W., 1994. "The sensitivity of strategic and corrective R&D policy in oligopolistic industries," Journal of International Economics, Elsevier, vol. 36(1-2), pages 133-150, February. [Downloadable!] (restricted)
    Other versions:
  6. Leahy, Dermot & Neary, J Peter, 1996. "International R&D Rivalry and Industrial Strategy without Government Commitment," Review of International Economics, Blackwell Publishing, vol. 4(3), pages 322-38, October.
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  7. Goldberg, Pinelopi Koujianou, 1995. "Strategic Export Promotion in the Absence of Government Precommitment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(2), pages 407-26, May. [Downloadable!] (restricted)
  8. Spencer, Barbara J & Brander, James A, 1983. "International R & D Rivalry and Industrial Strategy," Review of Economic Studies, Blackwell Publishing, vol. 50(4), pages 707-22, October. [Downloadable!] (restricted)
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  9. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455 Elsevier. [Downloadable!] (restricted)
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  10. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring. [Downloadable!] (restricted)
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  11. 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)
    Other versions:
  12. Krishna, Kala & Thursby, Marie, 1991. "Optimal policies with strategic distortions," Journal of International Economics, Elsevier, vol. 31(3-4), pages 291-308, November. [Downloadable!] (restricted)
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  13. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
  14. Leahy, Dermot & Neary, J Peter, 1997. "Public Policy towards R&D in Oligopolistic Industries," American Economic Review, American Economic Association, vol. 87(4), pages 642-62, September. [Downloadable!] (restricted)
    Other versions:
  15. Bester, Helmut & Petrakis, Emmanuel, 1993. "The incentives for cost reduction in a differentiated industry," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 519-534. [Downloadable!] (restricted)
    Other versions:
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