Cost Heterogeneity, Industry Concentration and Startegic Trade Policies
This paper shows that if domestic firms do not have identical unit costs, then the interplay between the Herfindahl index of concentration and the elasticity of the slope of the demand curve is of major importance in the determination of optimal trade policies. When the demand curve is concave, an export tax will shift the domestic industry's concentration in favor of lower cost firms, resulting in an improvement in allocative production efficiency.
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NBER Working Papers
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- Tran Huu Dung, 1993. "Optimal Taxation and Heterogeneous Oligopoly," Canadian Journal of Economics, Canadian Economics Association, vol. 26(4), pages 933-47, November.
- Bergstrom, Theodore C & Varian, Hal R, 1985. "When Are Nash Equilibria Independent of the Distribution of Agents' Characteristics?," Review of Economic Studies, Wiley Blackwell, vol. 52(4), pages 715-18, October.
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NBER Working Papers
1464, National Bureau of Economic Research, Inc.
- 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.
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