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Choice of trade policy for international oligopoly with incomplete information

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  • Ning, Haokai

Abstract

This paper studies the design of trade policies in an uncertain third market with incomplete information. Governments in each of the two countries select either direct quantity controls or export subsidies in an attempt to shift profits in favor of their firms in an international oligopolistic setting. It is shown that the country with firms having an information disadvantage tends to choose direct quantity control, while the country with well-informed firms would use export subsidy (export quota, respectively) when the degree of uncertainty is sufficiently high (low, respectively).

Suggested Citation

  • Ning, Haokai, 2023. "Choice of trade policy for international oligopoly with incomplete information," International Review of Economics & Finance, Elsevier, vol. 88(C), pages 1432-1443.
    • Handle: RePEc:eee:reveco:v:88:y:2023:i:c:p:1432-1443
    DOI: 10.1016/j.iref.2023.07.025
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    References listed on IDEAS

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    1. Mahmudul Anam & Shin-Hwan Chiang, 2000. "Export market correlation and strategic trade policy," Canadian Journal of Economics, Canadian Economics Association, vol. 33(1), pages 41-52, February.
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    6. 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.
    7. Keith Head & Barbara J. Spencer, 2017. "Oligopoly in international trade: Rise, fall and resurgence," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1414-1444, December.
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    9. Pearce, David G, 1984. "Rationalizable Strategic Behavior and the Problem of Perfection," Econometrica, Econometric Society, vol. 52(4), pages 1029-1050, July.
    10. Mahmudul Anam & Shin‐Hwan Chiang, 2000. "Export market correlation and strategic trade policy," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(1), pages 41-52, February.
    11. 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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    Cited by:

    1. Ning, Haokai & Li, Ruihui & Bi, Zifan, 2026. "Choice of export policy for oligopolistic industries with cross-ownership under uncertainty," Economics Letters, Elsevier, vol. 259(C).
    2. Haokai Ning & Xiaoyang Dang & Sisi Yan, 2025. "On production subsidies and import tariffs under uncertainty," Economics Bulletin, AccessEcon, vol. 45(2), pages 801-808.

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    More about this item

    Keywords

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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