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Export Subsidies, Entry Deterrence and Countervailing Tariffs

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  • Collie, David

Abstract

In this Cournot oligopoly model, a number of incumbent foreign firms face the potential entry of domestic firms. When there is no retaliation by the domestic country, the optimal foreign policy is to subsidize exports so that no domestic firms will enter the industry and the foreign firms capture the entire market. However, when the domestic country can retaliate with a countervailing tariff, then the optimal foreign export subsidy is zero. When the domestic country retaliates with a tariff and a production subsidy, then the optimal foreign export subsidy may be positive. Copyright 1992 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Collie, David, 1992. "Export Subsidies, Entry Deterrence and Countervailing Tariffs," The Manchester School of Economic & Social Studies, University of Manchester, vol. 60(2), pages 136-151, June.
    • Handle: RePEc:bla:manch2:v:60:y:1992:i:2:p:136-51
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    Cited by:

    1. Ram Mudambi, 1999. "Multinational Investment Attraction: Principal-Agent Considerations," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 65-79.
    2. Aditya Bhattacharjea, 2002. "Infant Industry Protection Revisited," International Economic Journal, Taylor & Francis Journals, vol. 16(3), pages 115-133.
    3. Sugata Marjit & Arijit Mukherjee, 2015. "Endogenous Market Structure, Trade Cost Reduction, and Welfare," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 171(3), pages 493-511, September.
    4. Thorsten Bayındır‐Upmann, 2003. "Strategic Environmental Policy under Free Entry of Firms," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 379-396, May.

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