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Information and disclosure in strategic trade policy

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  • Creane, Anthony
  • Miyagiwa, Kaz

Abstract

We relax the standard assumption in the strategic trade policy literature that governments possess complete information about the economy. Assuming instead that governments must obtain information from firms, we examine firms' incentive to disclose information to the governments in the Brander-Spencer setting. With quantity competition, we find firms disclosing both demand and cost information, thereby justifying the literature's omniscient-government assumption. With price competition, however, firms have no incentives to disclose demand or cost information, so governments remain uninformed. Further, with quantity competition and unknown demand, governments are caught in an informational prisoner's dilemma.

Suggested Citation

  • Creane, Anthony & Miyagiwa, Kaz, 2008. "Information and disclosure in strategic trade policy," Journal of International Economics, Elsevier, vol. 75(1), pages 229-244, May.
  • Handle: RePEc:eee:inecon:v:75:y:2008:i:1:p:229-244
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    References listed on IDEAS

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    1. Creane, Anthony & Miyagiwa, Kaz, 2008. "Information and disclosure in strategic trade policy," Journal of International Economics, Elsevier, pages 229-244.
    2. Jonathan Eaton & Gene M. Grossman, 1986. "Optimal Trade and Industrial Policy Under Oligopoly," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 383-406.
    3. Maggi, Giovanni, 1999. "Strategic Trade Policy under Incomplete Information," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(3), pages 571-594, August.
    4. Giovanni Maggi, 1998. "A Note on "Strategic Trade Policy Design with Asymmetric Information and Public Contracts"," Review of Economic Studies, Oxford University Press, vol. 65(3), pages 623-625.
    5. S. Lael Brainard & David Martimort, 1996. "Strategic Trade Policy Design with Asymmetric Information and Public Contracts," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 81-105.
    6. Sajal Lahiri & Yoshiyasu Ono, 1997. "Asymmetric oligopoly, international trade, and welfare: a synthesis," Journal of Economics, Springer, pages 291-310.
    7. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-940, December.
    8. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455 Elsevier.
    9. Okajima, Yoshitomo, 2003. "A note on 'optimal strategic trade policy under asymmetric information'," Journal of International Economics, Elsevier, pages 243-246.
    10. Xavier Vives, 1990. "Trade Association Disclosure Rules, Incentives to Share Information, and Welfare," RAND Journal of Economics, The RAND Corporation, pages 409-430.
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    Cited by:

    1. Fabio Antoniou & Phoebe Koundouri & Nikos Tsakiris, "undated". "Information Disclosure Under Different Modes of Regulation," DEOS Working Papers 1015, Athens University of Economics and Business.
    2. Fabio Antoniou & Nikos Tsakiris, 2016. "On the Informational Superiority of Quantities Over Prices in the Presence of an Externality," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, pages 227-250.
    3. Mizuno, Tomomichi & Takauchi, Kazuhiro, 2013. "Rules of origin and uncertain cost of compliance," MPRA Paper 44431, University Library of Munich, Germany.
    4. Anthony Creane & Kaz Miyagiwa, 2010. "Exporting Versus Foreign Direct Investment: Learning through Propinquity," Emory Economics 1010, Department of Economics, Emory University (Atlanta).
    5. Amir, Rabah & Jin, Jim Y. & Troege, Michael, 2010. "Robust results on the sharing of firm-specific information: Incentives and welfare effects," Journal of Mathematical Economics, Elsevier, vol. 46(5), pages 855-866, September.
    6. Creane, Anthony & Miyagiwa, Kaz, 2008. "Information and disclosure in strategic trade policy," Journal of International Economics, Elsevier, pages 229-244.
    7. Creane, Anthony & Miyagiwa, Kaz, 2008. "Information and disclosure in strategic trade policy," Journal of International Economics, Elsevier, pages 229-244.
    8. Fabio Antoniou & Nikos Tsakiris, 2014. "Information and Disclosure in Strategic Trade Policy: Revisited," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 415-427, September.
    9. repec:jes:wpaper:y:2012:v:4:p:736-746 is not listed on IDEAS
    10. Anthony Creane & Kaz Miyagiwa, 2009. "Foreign Direct Investment and the Welfare Effects of Cost Harmonization," Emory Economics 0905, Department of Economics, Emory University (Atlanta).
    11. Liviu-George Maha & Andreea-Nicoleta Donici & Andreea Maha, 2012. "Limits And Difficulties In Implementing The Strategic Trade Policy," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(4), pages 736-746, December.
    12. Anthony Creane & Kaz Miyagiwa, 2007. "Export, Foreign Direct Investment, and Joint Ventures: Learning the Rival's Costs through Propinquity," Emory Economics 0710, Department of Economics, Emory University (Atlanta).
    13. Bou√ęt, Antoine & Cassagnard, Patrice, 2013. "Strategic trade policy under asymmetric information with screening," Economic Modelling, Elsevier, vol. 32(C), pages 286-293.

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