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Non‐Uniform Strategic Trade Policy And Aggregate Profit Creation Effect

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  • Seung‐Gyu Jo

Abstract

This paper illustrates a new theoretical case for a strategic R&D policy in a two‐country third‐market international oligopoly model. Asymmetric treatment of domestic firms through a non‐uniform R&D policy can create aggregate profits without a foreign retaliation concern and further improve national welfare in addition to what a uniform policy accomplishes. This effect occurs when the conventional Brander–Spencer incentive is entirely absent as well as when the uniformly optimal R&D policy initially prevailed. The superiority of non‐uniform policy to uniform‐policy is not guaranteed, however, when the number of firms becomes endogenous.

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  • Seung‐Gyu Jo, 2010. "Non‐Uniform Strategic Trade Policy And Aggregate Profit Creation Effect," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(5), pages 644-662, November.
    • Handle: RePEc:bla:scotjp:v:57:y:2010:i:5:p:644-662
    DOI: 10.1111/j.1467-9485.2010.00534.x
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    1. Frank A.G. den Butter, 2012. "Managing Transaction Costs in the Era of Globalization," Books, Edward Elgar Publishing, number 14748.

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