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Export Taxes under Bertrand Duopoly

Author

Listed:
  • Clarke, Roger

    (Cardiff Business School)

  • Collie, David R.

    (Cardiff Business School)

Abstract

This article analyses export taxes in a Bertrand duopoly with product differentiation, where a home and a foreign firm both export to a third-country market. It is shown that the maximum-revenue export tax always exceeds the optimum-welfare export tax. In a Nash equilibrium in export taxes, the country with the low cost firm imposes the largest export tax. The results under Bertrand duopoly are compared with those under Cournot duopoly. It is shown that the absolute value of the export subsidy or tax under Cournot duopoly exceeds the export tax under Bertrand duopoly.

Suggested Citation

  • Clarke, Roger & Collie, David R., 2006. "Export Taxes under Bertrand Duopoly," Cardiff Economics Working Papers E2006/15, Cardiff University, Cardiff Business School, Economics Section.
  • Handle: RePEc:cdf:wpaper:2006/15
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    References listed on IDEAS

    as
    1. Brander, James & Krugman, Paul, 1983. "A 'reciprocal dumping' model of international trade," Journal of International Economics, Elsevier, vol. 15(3-4), pages 313-321, November.
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    3. Collie, David, 1991. "Optimum Welfare and Maximum Revenue Tariffs under Oligopoly," Scottish Journal of Political Economy, Scottish Economic Society, vol. 38(4), pages 398-401, November.
    4. Collie, David & de Meza, David, 2003. "Comparative advantage and the pursuit of strategic trade policy," Economics Letters, Elsevier, vol. 81(2), pages 279-283, November.
    5. Roger Clarke & David Collie, 2003. "Product differentiation and the gains from trade under Bertrand duopoly," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 658-673, August.
    6. Roger Clarke & David R. Collie, 2006. "Optimum‐Welfare And Maximum‐Revenue Tariffs Under Bertrand Duopoly," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(3), pages 398-408, July.
    7. Cheng, Leonard K, 1988. "Assisting Domestic Industries under International Oligopoly: The Relevance of the Nature of Competition to Optimal Policies," American Economic Review, American Economic Association, vol. 78(4), pages 746-758, September.
    8. Toru Kikuchi, 1998. "Strategic Export Policy in a Differentiated Duopoly: A Note," Open Economies Review, Springer, vol. 9(4), pages 315-325, October.
    9. David de Meza, 1986. "Export Subsidies and High Productivity: Cause or Effect?," Canadian Journal of Economics, Canadian Economics Association, vol. 19(2), pages 347-350, May.
    10. Vives, Xavier, 1985. "On the efficiency of Bertrand and Cournot equilibria with product differentation," Journal of Economic Theory, Elsevier, vol. 36(1), pages 166-175, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Choi, Kangsik & Lim, Seonyoung, 2014. "Strategic Trade Policies with Endogenous Choice of Competition Mode under a Vertical Structure," MPRA Paper 59074, University Library of Munich, Germany.
    2. Hiroshi Kurata, 2007. "Foreign equity caps under two types of competition: Bertrand and Cournot," Economics Bulletin, AccessEcon, vol. 6(21), pages 1-11.
    3. Koichi Kagitani, 2009. "Political Economy Of Strategic Export Policy In A Differentiated Duopoly," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 236-252, June.
    4. Clarke, Roger & Collie, David R., 2006. "Maximum-Revenue versus Optimum-Welfare Export Taxes," Cardiff Economics Working Papers E2006/22, Cardiff University, Cardiff Business School, Economics Section.
    5. Yasushi Kawabata, 2010. "Strategic Export Policy In Vertically Related Markets," Bulletin of Economic Research, Wiley Blackwell, vol. 62(2), pages 109-131, April.
    6. Roger Clarke & David R. Collie, 2008. "Maximum‐revenue versus Optimum‐welfare Export Taxes: a Delegation Game," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 919-929, November.
    7. Ghosh, Arghya & Saha, Souresh, 2015. "Price competition, technology licensing and strategic trade policy," Economic Modelling, Elsevier, vol. 46(C), pages 91-99.
    8. Anomita Ghosh & Rupayan Pal, 2017. "Welfare Ranking of Alternative Export Taxes Revisited," Economics Bulletin, AccessEcon, vol. 37(2), pages 1033-1044.
    9. Yoon, Jeong & Choi, Kangsik, 2018. "Why do export subsidies still exist? R&D and output subsidies," Japan and the World Economy, Elsevier, vol. 45(C), pages 30-38.
    10. Lim, Seonyoung & Choi, Kangsik, 2014. "Strategic Subsidy Policies with Endogenous Choice of Competition Mode," MPRA Paper 59462, University Library of Munich, Germany.
    11. Roger Clarke & David R. Collie, 2008. "Welfare In The Nash Equilibrium In Export Taxes Under Bertrand Duopoly," Bulletin of Economic Research, Wiley Blackwell, vol. 60(2), pages 183-189, April.
    12. Choi, Kangsik & Lee, Ki-Dong & Lim, Seonyoung, 2016. "Strategic Trade Policies In International Rivalry When Competition Mode Is Endogenous," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 57(2), pages 223-241, December.
    13. Vijay Mohan & Bharat Hazari, 2012. "Tax Policy When Countries Compete for Third Market Exports," Pacific Economic Review, Wiley Blackwell, vol. 17(5), pages 708-728, December.

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    More about this item

    Keywords

    Trade Policy; Imperfect Competition; Oligopoly;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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