IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

Industry Concentration and Strategic Trade Policy in Successive Oligopoly

  • Gjermund Nese

    ()

  • Odd Straume

    ()

We study a policy game between exporting and importing countries in vertically linked industries. In a successive international Cournot oligopoly, we analyse incentives for using tax instruments strategically to shift rents vertically, between exporting and importing countries, and horizontally, between exporting countries. We show that the equilibrium outcome depends crucially on the relative degree of competitiveness in the upstream and downstream parts of the industry. With respect to national welfare, a more competitive upstream industry may benefit an exporting (upstream) country and harm an importing (downstream) country. On the other hand, a more competitive downstream industry may harm exporting countries. Copyright Springer Science+Business Media, LLC 2007

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hdl.handle.net/10.1007/s10842-006-0001-7
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by Springer in its journal Journal of Industry, Competition and Trade.

Volume (Year): 7 (2007)
Issue (Month): 1 (March)
Pages: 31-52

as
in new window

Handle: RePEc:kap:jincot:v:7:y:2007:i:1:p:31-52
Contact details of provider: Web page: http://springerlink.metapress.com/link.asp?id=105724

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Barbara J. Spencer & Ronald W. Jones, 1989. "Vertical Foreclosure and International Trade Policy," NBER Working Papers 2920, National Bureau of Economic Research, Inc.
  2. Brander, James A. & Spencer, Barbara J., 1984. "Trade warfare: Tariffs and cartels," Journal of International Economics, Elsevier, vol. 16(3-4), pages 227-242, May.
  3. 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.
  4. Richardson, Martin, 1999. "Trade and Competition Policies: Concordia Discors?," Oxford Economic Papers, Oxford University Press, vol. 51(4), pages 649-64, October.
  5. Radetzki, Marian, 1999. "European natural gas: market forces will bring about competition in any case," Energy Policy, Elsevier, vol. 27(1), pages 17-24, January.
  6. Greenhut, M L & Ohta, H, 1979. "Vertical Integration of Successive Oligopolists," American Economic Review, American Economic Association, vol. 69(1), pages 137-41, March.
  7. Jones, R.W. & Spencer, B.J., 1989. "Trade And Protection In Vertically Related Markets," RCER Working Papers 195, University of Rochester - Center for Economic Research (RCER).
  8. Pascalis Raimondos-Møller & Alan D. Woodland, . "Tariff Strategies and Small Open Economies," EPRU Working Paper Series 97-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  9. Conrad Klaus, 1993. "Taxes and Subsidies for Pollution-Intensive Industries as Trade Policy," Journal of Environmental Economics and Management, Elsevier, vol. 25(2), pages 121-135, September.
  10. Huck, Steffen & Konrad, Kai A., 2001. "Merger profitability and trade policy
    [Fusionen und Handelspolitik]
    ," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-12, Social Science Research Center Berlin (WZB).
  11. Maroeska G. Boots, Fieke A.M. Rijkers and Benjamin F. Hobbs, 2004. "Trading in the Downstream European Gas Market: A Successive Oligopoly Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 73-102.
  12. Kennedy Peter W., 1994. "Equilibrium Pollution Taxes in Open Economies with Imperfect Competition," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 49-63, July.
  13. James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
  14. Winston W. Chang & Hajime Sugeta, 2004. "Conjectural Variations, Market Power, and Optimal Trade Policy in a Vertically Related Industry," Review of International Economics, Wiley Blackwell, vol. 12(1), pages 12-26, 02.
  15. Horn, H. & Levinsohn, J., 1998. "Merger Policies and Trade Liberalization," Working Papers 420, Research Seminar in International Economics, University of Michigan.
  16. James Brander & Slobodan Djajic, 1983. "Rent-Extracting Tariffs and the Management of Exhaustible Resources," Canadian Journal of Economics, Canadian Economics Association, vol. 16(2), pages 288-98, May.
  17. Hillman, Arye L & Templeman, Joseph, 1985. "On the Use of Trade Policy Measures by a Small Country to Counter Foreign Monopoly Power," Oxford Economic Papers, Oxford University Press, vol. 37(2), pages 346-52, June.
  18. Ziss, Steffen, 1997. "Strategic Trade Policy and Vertical Structure," Review of International Economics, Wiley Blackwell, vol. 5(1), pages 142-52, February.
  19. Golombec, R. & Gjelsvik, E. & Knut, E. & Rosendahl, E., 1996. "Increased Competition on the Supply Side on the Western European Natural Gas Merket," Memorandum 11/1996, Oslo University, Department of Economics.
  20. Steffen Ziss, 2005. "Horizontal Mergers and Successive Oligopoly," Journal of Industry, Competition and Trade, Springer, vol. 5(2), pages 99-114, June.
  21. Kamal Saggi & Halis Murat Yildiz, 2006. "On the International Linkages between Trade and Merger Policies," Review of International Economics, Wiley Blackwell, vol. 14(2), pages 212-225, 05.
  22. James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-89, August.
  23. Sajal Lahiri & Yoshiyasu Ono, 1999. "Optimal Tariffs in the Presence of Middlemen," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 55-70, February.
  24. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
  25. Percebois, Jacques, 1999. "The gas deregulation process in Europe: economic and political approach," Energy Policy, Elsevier, vol. 27(1), pages 9-15, January.
  26. Katrak, Homi, 1977. "Multi-national Monopolies and Commercial Policy," Oxford Economic Papers, Oxford University Press, vol. 29(2), pages 283-91, July.
  27. Jota Ishikawa & Barbara J. Spencer, 1996. "Rent-Shifting Export Subsidies with an Imported Intermediate Product," NBER Working Papers 5458, National Bureau of Economic Research, Inc.
  28. Bernhofen, Daniel M, 1997. "Strategic Trade Policy in a Vertically Related Industry," Review of International Economics, Wiley Blackwell, vol. 5(3), pages 429-33, August.
  29. Mark Rysman, 2000. "Competition Policy as Strategic Trade," Papers 0100, Boston University - Industry Studies Programme.
  30. Michael A. Salinger, 1988. "Vertical Mergers and Market Foreclosure," The Quarterly Journal of Economics, Oxford University Press, vol. 103(2), pages 345-356.
  31. Ishikawa, Jota & Lee, Ki-Dong, 1997. "Backfiring tariffs in vertically related markets," Journal of International Economics, Elsevier, vol. 42(3-4), pages 395-423, May.
  32. Simon Cowan, 1989. "Trade and Competition Policies for Oligopolies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 125(3), pages 464-483, September.
  33. Bergstrom, Theodore C, 1982. "On Capturing Oil Rents with a National Excise Tax," American Economic Review, American Economic Association, vol. 72(1), pages 194-201, March.
  34. Austvik, Ole Gunnar, 1997. "Gas pricing in a liberalized European market; will the rent be taxed away?," Energy Policy, Elsevier, vol. 25(12), pages 997-1012, October.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:kap:jincot:v:7:y:2007:i:1:p:31-52. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)

or (Rebekah McClure)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.