International Trade Policy towards Monopolies and Oligopolies
AbstractWe 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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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0302002.
Length: 20 pages
Date of creation: 04 Feb 2003
Date of revision: 17 Mar 2003
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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Product Differentiation; Strategic Trade Policy; Policy Reversals; R&D subsidies; monopoly; duopoly.;
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-02-10 (All new papers)
- NEP-COM-2003-02-10 (Industrial Competition)
- NEP-PKE-2003-02-10 (Post Keynesian Economics)
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