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Regulatory Protection When Firms Move First



I investigate the imposition of a horizontal technical barrier to trade (HTBT) in a symmetric, cross-hauling duopoly. Tariffs and subsidies are ruled out, but, in the absence of a mutual recognition agreement, it is possible for governments to impose HTBTs, so long as firms apply different technologies. If firms are first movers, this possibility may induce them to avoid technical collaboration, in order to tempt governments into creating local monopolies, except where spillovers and R&D effects are high. This exacerbates the costs of regulatory protection, compared to standard models without R&D or spillovers.

Suggested Citation

  • T.Huw Edwards, 2009. "Regulatory Protection When Firms Move First," Discussion Paper Series 2009_19, Department of Economics, Loughborough University, revised Nov 2009.
  • Handle: RePEc:lbo:lbowps:2009_19

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    References listed on IDEAS

    1. Costinot, Arnaud, 2008. "A comparative institutional analysis of agreements on product standards," Journal of International Economics, Elsevier, vol. 75(1), pages 197-213, May.
    2. Lutz, Stefan, 1996. "Vertical Product Differentiation, Quality Standards, and International Trade Policy," CEPR Discussion Papers 1443, C.E.P.R. Discussion Papers.
    3. Crampes, Claude & Hollander, Abraham, 1995. "Duopoly and quality standards," European Economic Review, Elsevier, vol. 39(1), pages 71-82, January.
    4. Das, Satya P. & Donnenfeld, Shabtai, 1989. "Oligopolistic competition and international trade : Quantity and quality restrictions," Journal of International Economics, Elsevier, vol. 27(3-4), pages 299-318, November.
    5. Daniel Sturm, 2006. "Product standards, trade disputes, and protectionism," Canadian Journal of Economics, Canadian Economics Association, vol. 39(2), pages 564-581, May.
    6. Irwin, Douglas A. & Pavcnik, Nina, 2004. "Airbus versus Boeing revisited: international competition in the aircraft market," Journal of International Economics, Elsevier, vol. 64(2), pages 223-245, December.
    7. H. Lutz, Stefan, 2000. "Trade Effects of Minimum Quality Standards with and without Deterred Entry," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 314-344.
    8. T. Huw Edwards, 2004. "Trade and Strategic Regulatory Bias in Monopolistic Industries," Discussion Paper Series 2004-21, Department of Economics, Loughborough University, revised Sep 2004.
    9. Edwards Terence Huw, 2009. "Tariffs, Horizontal Regulatory Standards and Protection against Foreign Competitors," Global Economy Journal, De Gruyter, vol. 9(2), pages 1-27, June.
    10. T. Huw Edwards, 2008. "International Share Ownership, Profit Shifting and Protectionism," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, T├╝bingen, vol. 164(2), pages 280-301, June.
    11. 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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    More about this item


    Research and development; spillovers; trade; protection.;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F19 - International Economics - - Trade - - - Other
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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