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Industry concentration and strategic trade policy in successive oligopoly

  • Nese, Gjermund

    ()

    (Institute for Research in Economics and Business Administration)

  • Straume, Odd Rune

    ()

    (Stein Rokkan Centre for Social Studies and University of Bergen)

We study a policy game between exporting and importing countries in vertically linked industries. In a successive international Cournot oligopoly, we let the governments in the importing and exporting countries use tax instruments strategically to shift rents up or down the vertical value-chain. We show that the equilibrium outcome depends crucially on the relative degree of competitiveness in the upstream and downstream parts of the industry. With respect to national welfare, a more competitive upstream industry may benefit an exporting (upstream) country while harming an importing (downstream) country. On the other hand, a more competitive downstream industry may harm exporting countries.

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Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 10/04.

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Length: 29 pages
Date of creation: 06 Nov 2004
Date of revision:
Handle: RePEc:hhs:bergec:2004_010
Contact details of provider: Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Phone: (+47)55589200
Fax: (+47)55589210
Web page: http://www.uib.no/econ/en
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