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Import-Subsidy Coordination and the Gains from International Diffusion Of Differentiated Middle Products


  • Hwan Lin


This paper shows that under reasonable parameter values it is independently rational for an importing country to impose a tariff on differentiated middle products, which are invented by monopolists worldwide in the high-technology sector. But to realize mutual gains, countries must use import subsidies in a cooperative manner. To dictate policy coordination, the paper computes the bilaterally coordinated subsidy bands under different sets of parameter values, reflecting monopoly power, spending share, and supply elasticities. [F12, F13]

Suggested Citation

  • Hwan Lin, 1998. "Import-Subsidy Coordination and the Gains from International Diffusion Of Differentiated Middle Products," International Economic Journal, Taylor & Francis Journals, vol. 12(2), pages 55-76.
  • Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:55-76 DOI: 10.1080/10168739800000013

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    References listed on IDEAS

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    8. Markusen, James R & Wigle, Randall M, 1989. "Nash Equilibrium Tariffs for the United States and Canada: The Roles of Country Size, Scale Economies, and Capital Mobility," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 368-386, April.
    9. Sanyal, Kalyan K & Jones, Ronald W, 1982. "The Theory of Trade in Middle Products," American Economic Review, American Economic Association, vol. 72(1), pages 16-31, March.
    10. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    11. Flam, Harry & Helpman, Elhanan, 1987. "Industrial policy under monopolistic competition," Journal of International Economics, Elsevier, vol. 22(1-2), pages 79-102, February.
    12. Gasiorek, Michael & Smith, Alasdair & Venables, Anthony J., 1989. "Tariffs, subsidies and retaliation," European Economic Review, Elsevier, vol. 33(2-3), pages 480-489, March.
    13. Venables, Anthony J, 1987. "Trade and Trade Policy with Differentiated Products: A Chamberlinian-Ricardian Model," Economic Journal, Royal Economic Society, vol. 97(387), pages 700-717, September.
    14. Gene M. Grossman (ed.), 1992. "Imperfect Competition and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262570939, July.
    15. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
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