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International Cross-Ownership and Strategic Trade Policies

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  • Long, Ngo Van
  • Soubeyran, Antoine

Abstract

The paper analyzes a model of strategic trade policies in the presence of international cross-ownership of firms that are heterogenous both in terms of costs and in terms of extent of foreign ownership. The equilibrium pattern of taxes and subsidies is characterized for any arbitrary cross-ownership profile, and any number of heterogenous firms. The equilibrium subsidy (or tax) given to any firm is shown to depend, in a separable manner, on the firm's characteristics and on the covariance of the distribution of cost and foreign ownership across firms. A neutrality theorem is proved concerning the Nash equilibrium of the game between governments: in equilibrium, the pattern of trade, the value of each firm, and world welfare are independent of the ownership pattern. Copyright 2001 by Blackwell Publishing Ltd.

Suggested Citation

  • Long, Ngo Van & Soubeyran, Antoine, 2001. "International Cross-Ownership and Strategic Trade Policies," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 1-15, February.
  • Handle: RePEc:bla:reviec:v:9:y:2001:i:1:p:1-15
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    Cited by:

    1. Fanti, Luciano & Buccella, Domenico, 2016. "Passive unilateral cross-ownership and strategic trade policy," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-22.
    2. Ngo Van Long & Antoine Soubeyran, 2003. "A Theory of Favoritism under International Oligopoly," CIRANO Working Papers 2003s-15, CIRANO.
    3. Jota Ishikawa & Yoichi Sugita & Laixun Zhao, 2011. "Commercial Policy and Foreign Ownership," Review of International Economics, Wiley Blackwell, vol. 19(2), pages 300-312, May.
    4. Canton, Joan, 2007. "Environmental Taxation and International Eco-Industries," Economic Theory and Applications Working Papers 10274, Fondazione Eni Enrico Mattei (FEEM).

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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