IDEAS home Printed from https://ideas.repec.org/a/oup/restud/v66y1999i2p447-474..html
   My bibliography  Save this article

Learning by Doing, Precommitment and Infant-Industry Promotion

Author

Listed:
  • Dermot Leahy
  • J. Peter Neary

Abstract

We examine the implications for strategic trade policy of different assumptions about precommitment in a two-period Cournot oligopoly game with learning by doing. The inability of firms and governments to precommit to future actions encourages strategic behaviour which justifies an optimal first-period export tax relative to the profit-shifting benchmark of an export subsidy. In the linear case the optimal subsidy is increasing in the rate of learning with government precommitment but decreasing in it without, in apparent contradiction to the infant-industry argument. Extensions to active foreign policy, distortionary taxation and Bertrand competition are also considered.

Suggested Citation

  • Dermot Leahy & J. Peter Neary, 1999. "Learning by Doing, Precommitment and Infant-Industry Promotion," Review of Economic Studies, Oxford University Press, vol. 66(2), pages 447-474.
  • Handle: RePEc:oup:restud:v:66:y:1999:i:2:p:447-474.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/1467-937X.00094
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joshua Aizenman & Jaewoo Lee, 2008. "Financial versus Monetary Mercantilism: Long-run View of Large International Reserves Hoarding," The World Economy, Wiley Blackwell, vol. 31(5), pages 593-611, May.
    2. Miravete, Eugenio J., 2003. "Time-consistent protection with learning by doing," European Economic Review, Elsevier, vol. 47(5), pages 761-790, October.
    3. J. Neary, 2006. "International Trade and the Environment: Theoretical and Policy Linkages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(1), pages 95-118, January.
    4. Neary, J Peter & Leahy, Dermot, 2000. "Strategic Trade and Industrial Policy towards Dynamic Oligopolies," Economic Journal, Royal Economic Society, vol. 110(463), pages 484-508, April.
    5. Arghya Ghosh & Souresh Saha, 2008. "Trade Policy in the Presence of Technology Licensing," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 45-68, February.
    6. Leahy, Dermot & Neary, J Peter, 2001. "Robust Rules for Industrial Policy in Open Economies," CEPR Discussion Papers 2731, C.E.P.R. Discussion Papers.
    7. Joshua Aizenman & Jaewoo Lee, 2008. "The Real Exchange Rate, Mercantilism and the Learning by Doing Externality," NBER Working Papers 13853, National Bureau of Economic Research, Inc.
    8. Joshua Aizenman & Jaewoo Lee, 2010. "Real Exchange Rate, Mercantilism And The Learning By Doing Externality," Pacific Economic Review, Wiley Blackwell, vol. 15(3), pages 324-335, August.
    9. Delia Baghdasaryan & Kresimir Zigic, 2010. "Tariffs, market conduct and government commitment," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 18(1), pages 91-122, January.
    10. Bläsi, Albrecht & Requate, Till, 2005. "Learning-by-Doing with Spillovers in Competitive Industries, Free Entry, and Regulatory Policy," Economics Working Papers 2005-09, Christian-Albrechts-University of Kiel, Department of Economics.
    11. Kazuhiko Yokota & Akinori Tomohara, 2009. "Extending the Learning-By-Exporting Hypothesis: Introducing a Credit Constraint," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 15(2), pages 169-177, May.
    12. Seung-Gyu Jo, 2010. "Non-Uniform Strategic Trade Policy And Aggregate Profit Creation Effect," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(5), pages 644-662, November.
    13. Greetje Everaert, 2003. "Technology Adoption under Price Undertakings," LICOS Discussion Papers 13703, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    14. Dermot Leahy & J. Peter Neary, 2001. "Robust rules for industrial policy open economies," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(4), pages 393-409.
    15. Kresimir Zigic, 2011. "Strategic Interactions in Markets with Innovative Activity: The Cases of Strategic Trade Policy and Market Leadership," CERGE-EI Books, The Center for Economic Research and Graduate Education - Economics Institute, Prague, edition 1, number b06, November.
    16. Neary, J Peter & O'Sullivan, Paul, 1999. " Beat 'Em or Join 'Em? Export Subsidies versus International Research Joint Ventures in Oligopolistic Markets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 577-596, December.
    17. repec:kap:iaecre:v:15:y:2009:i:2:p:169-177 is not listed on IDEAS
    18. Moraga-Gonzalez, Jose Luis & Viaene, Jean-Marie, 2005. "Trade policy and quality leadership in transition economies," European Economic Review, Elsevier, vol. 49(2), pages 359-385, February.
    19. Vladimir Petkov, 2007. "Infant Firm Subsidization in Industries with Dynamic Structure," Journal of Industry, Competition and Trade, Springer, vol. 7(2), pages 73-93, June.
    20. Willmann, Gerald, 2004. "Pareto gains from trade: a dynamic counterexample," Economics Letters, Elsevier, vol. 83(2), pages 199-204, May.
    21. José Luis Moraga Gonzales & Jean-Marie Viaene, 2001. "Trade and Industrial Policy of Transition Economies," CESifo Working Paper Series 446, CESifo Group Munich.
    22. Delia Ionaºcu & Kresimir Zigic, 2005. "Strategic Tariff Protection, Market Conduct, and Government Commitment Levels in Developing Economies," CERGE-EI Working Papers wp249, The Center for Economic Research and Graduate Education - Economics Institute, Prague.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:66:y:1999:i:2:p:447-474.. 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: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.