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Industrial Concentration Reverses the Timing in a Trade Policy Game

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  • Masayuki Hayashibara

Abstract

Faced with an export subsidy by a foreign government, importing countries have to decide whether they should impose countervailing duties or not. Using a Cournot duopoly model, Collie (Weltwirtschaftliches Archiv 130: 191–209) shows that the subgame perfect equilibrium occurs when the importing country sets its production subsidy and tariff at stage one and the foreign government sets its export subsidy at stage two. That is, an importing country will choose to commit itself not to use countervailing duties. In this paper, we extend Collie's duopoly model to the case of a Cournot oligopoly and show that the country in which industry is less concentrated tends to emerge as the Stackelberg leader. Copyright Kluwer Academic Publishers 2002

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  • Masayuki Hayashibara, 2002. "Industrial Concentration Reverses the Timing in a Trade Policy Game," Open Economies Review, Springer, vol. 13(1), pages 73-86, January.
    • Handle: RePEc:kap:openec:v:13:y:2002:i:1:p:73-86
    DOI: 10.1023/A:1012215913394
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    References listed on IDEAS

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    1. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
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    6. David Collie, 1994. "Endogenous timing in trade policy games: Should governments use countervailing duties?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(1), pages 191-209, March.
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    8. Kit Wong & Kong Chow, 1997. "Endogenous Sequencing in Strategic Trade Policy Games Under Uncertainty," Open Economies Review, Springer, vol. 8(4), pages 353-369, October.
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    Cited by:

    1. Tsuyoshi Toshimitsu, 2012. "The endogenous timing of tariff policy," Discussion Paper Series 80, School of Economics, Kwansei Gakuin University, revised Feb 2012.
    2. Tsuyoshi Toshimitsu, 2013. "A Note on the Endogenous Timing of Tariff Policy in the Presence of a Time Lag between Production and Trade Decisions," Open Economies Review, Springer, vol. 24(2), pages 361-369, April.

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    policy timing; strategic trade policy;

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