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Assisting Domestic Industries under International Oligopoly: The Relevance of the Nature of Competition to Optimal Policies

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  • Cheng, Leonard K

Abstract

Optimal trade and industrial policies are derived for a home market that is supplied by a domestic firm and a foreign firm. The optimal policy combination can be quite sensitive to the nature of the duopoly's competition. For example, for some cost and demand s tructures, the optimal policy under Cournot competition consists of a domestic production tax and a tariff, but that under Bertrand compet ition consists of a production subsidy and free trade. Copyright 1988 by American Economic Association.

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  • Cheng, Leonard K, 1988. "Assisting Domestic Industries under International Oligopoly: The Relevance of the Nature of Competition to Optimal Policies," American Economic Review, American Economic Association, vol. 78(4), pages 746-758, September.
    • Handle: RePEc:aea:aecrev:v:78:y:1988:i:4:p:746-58
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