Second-mover advantage under strategic subsidy policy in a third market model
This paper examines which of the Stackelberg leader or its follower has the advantage under strategic subsidy policy in a third market model. We show that even if governments choose export subsidies in whichever of a simultaneous-move or sequential-move game, the leader firm always loses its first-mover advantage in a Stackelberg duopoly. Furthermore, we examine the endogenous timing of subsidies by governments and show that the second-mover advantage occurs with regard to profit and welfare under the endogenous timing of subsidies.
Volume (Year): 29 (2009)
Issue (Month): 1 ()
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- Orlando I. Balboa & Andrew F. Daughety & Jennifer F. Reinganum, 2001.
"Market Structure and the Demand for Free Trade,"
Vanderbilt University Department of Economics Working Papers
0112, Vanderbilt University Department of Economics, revised Dec 2002.
- 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.
- James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
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