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Public Ownership and Trade Policy

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  • Ngo Van Long
  • Frank Staehler

Abstract

This paper discusses the influence of public ownership on trade policy instruments. We demonstrate three important invariance results. First, the degree of public ownership affects neither the level of socially optimal activities nor welfare if the government chooses optimal trade policy instruments. Second, in the case of rivalry between domestic export firms, the optimal export tax is independent of the degree of public ownership. Third, in the case of rivalry in the home market, the optimal import tariff is independent of the degree of public ownership. In this case, the optimal production subsidy decreases with public ownership if the optimal tariff is positive. For the case of Cournot rivalry in a third market, the optimal export subsidy is an increasing function of the public ownership share, while in the case of Bertrand rivalry with differentiated products, the optimal export tax is an increasing function of that parameter. Cet article considère l'influence de la propriété publique sur les choix des politiques commerciales. Nous démontrons trois théorèmes sur l'invariance. Premièrement, le degré de la propriété publique n'a aucun impact sur le niveau des activités optimales si le gouvernement utilise les politiques commerciales optimales. Deuxièmement, dans le cas de concurrence entre les firmes qui exportent, le taux de taxe optimale est indépendant du degré de la propriété publique. Troisièmement, dans le cas de concurrence sur le marché domestique, le taux de tarif douanier optimal est indépendant du degré de la propriété publique. Dans le cas de concurrence à la Cournot sur un troisième marché, le taux d'aide optimale est une fonction croissante du pourcentage de la possession publique, tandis que dans le cas de concurrence à la Bertrand, le taux de taxe optimale en est une fonction décroissante.

Suggested Citation

  • Ngo Van Long & Frank Staehler, 2007. "Public Ownership and Trade Policy," CIRANO Working Papers 2007s-07, CIRANO.
  • Handle: RePEc:cir:cirwor:2007s-07
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    File URL: http://www.cirano.qc.ca/files/publications/2007s-07.pdf
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    References listed on IDEAS

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    1. Andreas HaufLer & Guttorm Schjelderup & Frank Stähler, 2005. "Barriers to Trade and Imperfect Competition: The Choice of Commodity Tax Base," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(3), pages 281-300, May.
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    3. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455 Elsevier.
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    13. Winston Chang, 2005. "Optimal Trade and Privatization Policies in an International Duopoly with Cost Asymmetry," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(1), pages 19-42.
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    More about this item

    Keywords

    Semi-public firms; trade policy; Entreprises semi-publiques; politiques commerciales;

    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

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