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Strategic Trade Policy under Uncertainty

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  • Qiu, Larry D

Abstract

This paper extends the Brander-Spencer (1985) model by considering market uncertainty, exploring nonlinear policy, and examining firms' choices of strategic variables. By investigating the interrelationship between trade policy and market conduct, we find that unlike the often-studied linear policy, a nonlinear policy can influence the domestic firm's choice of strategic variables and hece alter the market conduct in favor of the domestic country. Therefore, a nonlinear policy proves strictly superior to a linear one. Copyright 1995 by Blackwell Publishing Ltd.

Suggested Citation

  • Qiu, Larry D, 1995. "Strategic Trade Policy under Uncertainty," Review of International Economics, Wiley Blackwell, vol. 3(1), pages 75-85, February.
  • Handle: RePEc:bla:reviec:v:3:y:1995:i:1:p:75-85
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    References listed on IDEAS

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    1. James E. Anderson & J. Peter Neary, 1991. "A new approach to evaluating trade policy," Working Papers 199105, School of Economics, University College Dublin.
    2. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 107-125.
    3. Hatta, Tatsuo, 1977. "A Recommendation for a Better Tariff Structure," Econometrica, Econometric Society, vol. 45(8), pages 1859-1869, November.
    4. Anderson, James E & Neary, J Peter, 1992. "Trade Reform with Quotas, Partial Rent Retention, and Tariffs," Econometrica, Econometric Society, vol. 60(1), pages 57-76, January.
    5. Anderson, James E. & Bannister, Geoffrey, 1992. "The trade restrictiveness index : an application to Mexican agriculture," Policy Research Working Paper Series 874, The World Bank.
    6. Bertrand, Trent J & Vanek, Jaroslav, 1971. "The Theory of Tariffs, Taxes, and Subsidies: Some Aspects of the Second Best," American Economic Review, American Economic Association, pages 925-931.
    7. Tatsuo Hatta, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Oxford University Press, vol. 44(1), pages 1-21.
    8. Lopez, Ramon & Panagariya, Arvind, 1992. "On the Theory of Piecemeal Tariff Reform: The Case of Pure Imported Intermediate Inputs," American Economic Review, American Economic Association, pages 615-625.
    9. Fukushima, Takashi, 1979. "Tariff Structure, Nontraded Goods and Theory of Piecemeal Policy Recommendations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 427-435, June.
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    Cited by:

    1. Mesa, Fernando & Perilla, Juan Ricardo, 2007. "Exportaciones y políticas comerciales óptimas para la industria textil y de confecciones. Casos de Colombia y México, 1990-2002," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(293), pages 195-221, enero-mar.
    2. Mustafa Caglayan & Murat Usman, 2004. "Incompletely informed policymakers and trade policy in oligopolistic industries," Manchester School, University of Manchester, pages 283-297.
    3. Keisuke Hattori & Keisaku Higashida, 2011. "When Government Misleads US: Sending Misinformation as Protectionist Devices," Discussion Paper Series 75, School of Economics, Kwansei Gakuin University, revised Aug 2011.
    4. Desai, Mihir A. & Hines Jr., James R., 2008. "Market reactions to export subsidies," Journal of International Economics, Elsevier, pages 459-474.
    5. Yoshino, Hisao, 2011. "Strategic trade policy and non-linear subsidy : in the case of price competition," IDE Discussion Papers 287, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Glass, Amy Jocelyn & Saggi, Kamal, 1999. "FDI policies under shared factor markets," Journal of International Economics, Elsevier, pages 309-332.
    7. Aditya Bhattacharjea, 2002. "Infant Industry Protection Revisited," International Economic Journal, Taylor & Francis Journals, pages 115-133.
    8. Fabio Antoniou & Nikos Tsakiris, 2014. "Information and Disclosure in Strategic Trade Policy: Revisited," Journal of Industry, Competition and Trade, Springer, pages 415-427.

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