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Product Differentiation – An Alternative To Cvds: A Comment

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  • Witness Simbanegavi

Abstract

This note is a comment to Wang (2008)'s contribution in the SAJE (Vol. 76 (3)). We show that when firms' strategic variables are prices and not quantities, Wang's findings are largely reversed. In particular, the foreign government levies an export tax on its producer as opposed to an export subsidy. Further, both the “optimal tax” and the domestic welfare are non‐monotonic in the degree of product differentiation.

Suggested Citation

  • Witness Simbanegavi, 2010. "Product Differentiation – An Alternative To Cvds: A Comment," South African Journal of Economics, Economic Society of South Africa, vol. 78(2), pages 219-223, June.
    • Handle: RePEc:bla:sajeco:v:78:y:2010:i:2:p:219-223
    DOI: 10.1111/j.1813-6982.2010.01243.x
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    References listed on IDEAS

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    1. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    2. Yu‐ter Wang, 2008. "Product Differentiation: An Alternative To Cvds," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 513-517, September.
    3. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    4. Jonathan Eaton & Gene M. Grossman, 1986. "Optimal Trade and Industrial Policy Under Oligopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(2), pages 383-406.
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