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Domestic Welfare Effects of Foreign Strategic Trade Policies

Author

Listed:
  • Kohler, Philippe

    (Institut d’Etudes Politiques de Paris)

  • O. Moore, Michael

    (The George Washington University)

Abstract

Within a duopoly strategic trade policy model, we analyze the effect of foreign strategic trade policies on domestic welfare when the domestic government pursues a laissez-faire import policy. With Cournot competition and domestic production and consumption, an increase in the foreign strategic export subsidy increases domestic welfare when the domestic price exceeds the foreign firm marginal cost. With Bertrand competition, an increase in the foreign strategic export tax has ambiguous effects on domestic welfare and depends on the degree of product differentiation and domestic cross-price elasticity of demand between domestic and foreign goods.

Suggested Citation

  • Kohler, Philippe & O. Moore, Michael, 2003. "Domestic Welfare Effects of Foreign Strategic Trade Policies," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 18, pages 573-586.
  • Handle: RePEc:ris:integr:0249
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    References listed on IDEAS

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    Cited by:

    1. Desai, Mihir A. & Hines Jr., James R., 2008. "Market reactions to export subsidies," Journal of International Economics, Elsevier, vol. 74(2), pages 459-474, March.

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    More about this item

    Keywords

    Dumping; Laissez-faire policy; Strategic trade policy;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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