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An Evaluation of Neutral Trade Policy Incentives Under Increasing Returns to Scale

In: Modeling Developing Countries' Policies in General Equilibrium

Author

Listed:
  • Jaime de Melo
  • David Roland-Holst

Abstract

New developments in the theory of international trade often suggest, implicitly or explicitly, that in an imperfectly competitive environment, government intervention may be needed to achieve optimality. The most celebrated example in this new literature is the profit-shifting argument of Brander and Spencer (1984). Another example, perhaps more widely applicable, is the argument developed by Krugman (1985) showing that protection can serve as an export promotion policy under certain circumstances. These arguments have fostered a literature on strategic trade theory, which deals with conditions of imperfect competition between international trading partners. The trade and development literature, on the other hand, concentrates on the implications of imperfectly competitive domestic markets…

Suggested Citation

  • Jaime de Melo & David Roland-Holst, 2015. "An Evaluation of Neutral Trade Policy Incentives Under Increasing Returns to Scale," World Scientific Book Chapters, in: Modeling Developing Countries' Policies in General Equilibrium, chapter 17, pages 367-383, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789814494816_0017
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    Cited by:

    1. Lopez, Ramon, 1995. "Synergy and investment efficiency effects of trade and labor market distortions," European Economic Review, Elsevier, vol. 39(7), pages 1321-1344, August.
    2. Cockburn, John & Decaluwé, Bernard & Dostie, Benoît, 1998. "Les leçons du mariage entre les modèles d’équilibre général calculable et la nouvelle théorie du commerce international," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(3), pages 381-413, septembre.

    More about this item

    Keywords

    Applied General Equilibrium Models; Trade Policy; Computable General Equilibrium; Archetypes;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F00 - International Economics - - General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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