Strategic Trade Policy and Signalling with Unobservable Costs
AbstractIn an environment in which home firm costs are private information, home firm output can signal these costs to a foreign competitor and a home policymaker. High-cost home firms have an incentive to misrepresent themselves as low-cost. This is understood by the foreign firm and the home policymaker and results in the first-period optimal per-unit output subsidy to the home firm being less than it would be if home firm output was not a signal of home firm costs. These results are extended to the case of simultaneous signaling and signaling through price. Copyright 1998 by Blackwell Publishing Ltd.
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Bibliographic InfoPaper provided by Department of Economics, University of York in its series Discussion Papers with number 95/6.
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Other versions of this item:
- Wright, Donald J, 1998. "Strategic Trade Policy and Signalling with Unobservable Costs," Review of International Economics, Wiley Blackwell, vol. 6(1), pages 105-19, February.
- Wright, D.J., 1994. "Strategic Trade Policy and Signalling with Unobservable Costs," Working Papers 198, University of Sydney, School of Economics.
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- Bouët, Antoine & Cassagnard, Patrice, 2013. "Strategic trade policy under asymmetric information with screening," Economic Modelling, Elsevier, vol. 32(C), pages 286-293.
- Sonali Deraniyagala & Ben Fine, 2000. "New Trade Theory Versus Old Trade Policy: A Continuing Enigma," Working Papers 102, Department of Economics, SOAS, University of London, UK.
- Sun, Ning & Yao, Hongxin, 2011. "Manipulable behavior in international trade," Economic Modelling, Elsevier, vol. 28(1-2), pages 60-66, January.
- Matloob Piracha, 2004. "Export Subsidies and Countervailing Duties Under Asymmetric Information," Studies in Economics 0410, Department of Economics, University of Kent.
- Gasmi, Farid & Malin, Eric & Tandé, François, 2004. "Lobbying in Antidumping," IDEI Working Papers 320, Institut d'Économie Industrielle (IDEI), Toulouse.
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