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The Profits Of Firms And Countervailing Duties In Vertically Related Markets

  • YU-TER WANG

    ()

    (Department of Economics, Ming Chuan University, Taiwan)

This paper studies the relationship between the profits of firms and countervailing duties in vertically related markets characterized by oligopolies. It is shown that a countervailing duty equal to the foreign export subsidy is required to neutralize the impact of foreign export subsidies on the profits of domestic firms. The domestic country has an incentive to impose a countervailing duty on foreign final goods even though foreign governments only subsidize exports of intermediate goods. In addition, foreign exporting firms may benefit from a countervailing duty more than a foreign export subsidy.

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Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal The Singapore Economic Review.

Volume (Year): 55 (2010)
Issue (Month): 04 ()
Pages: 749-756

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Handle: RePEc:wsi:serxxx:v:55:y:2010:i:04:p:749-756
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  1. Spencer, Barbara J. & Jones, Ronald W., 1992. "Trade and protection in vertically related markets," Journal of International Economics, Elsevier, vol. 32(1-2), pages 31-55, February.
  2. Ishikawa, Jota & Spencer, Barbara J., 1999. "Rent-shifting export subsidies with an imported intermediate product," Journal of International Economics, Elsevier, vol. 48(2), pages 199-232, August.
  3. Moschini, GianCarlo & Meilke, Karl D., 1992. "Production Subsidy and Countervailing Duties in Vertically Related Markets: The Hog-Pork Case Between Canada and the United States," Staff General Research Papers 572, Iowa State University, Department of Economics.
  4. Collie, David, 1994. "Strategic trade policy and retaliation," Japan and the World Economy, Elsevier, vol. 6(1), pages 75-88.
  5. Sykes, Alan O., 1996. "The economics of injury in antidumping and countervailing duty cases," International Review of Law and Economics, Elsevier, vol. 16(1), pages 5-26, March.
  6. Yu-Ter Wang, 2004. "Countervailing Duties, Foreign Export Subsidies and Import Tariffs," The Japanese Economic Review, Japanese Economic Association, vol. 55(2), pages 153-161.
  7. Kyle Bagwell & Robert W. Staiger, 2006. "Will International Rules on Subsidies Disrupt the World Trading System?," American Economic Review, American Economic Association, vol. 96(3), pages 877-895, June.
  8. Dixit, Avinash, 1988. "Anti-dumping and countervailing duties under oligopoly," European Economic Review, Elsevier, vol. 32(1), pages 55-68, January.
  9. Carter, Colin & Chadee, Doren & Darko, Kwame, 1999. "Are Subsidies to be Blamed? A Reexamination of U.S. Countervailing Duty on Hog Imports From Canada," Journal of Policy Modeling, Elsevier, vol. 21(7), pages 823-830, December.
  10. Yu-ter Wang, 2008. "Product Differentiation: An Alternative To Cvds," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 513-517, 09.
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