Public Firms in a Dynamic Third Market Model
We set the third market model in a dynamic context to decide whether a country can achieve benefits by subsidizing a public rm's exports. We use calculus of variations with the constraint that the welfare is either maximized or grows at constant rate, reflecting the public concern of the firm. We conclude that a subsidy can be a good strategy for the country in some instances, even though only over a finite period of time. The duration of this period depends on the output strategy of the public firm as well as on exogenous factors.
|Date of creation:||Jan 2001|
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- James Brander & Paul Krugman, 1980.
"A "Reciprocal Dumping" Model of International Trade,"
405, Queen's University, Department of Economics.
- 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.
- James A. Brander & Paul Krugman, 1983. "A 'Reciprocal Dumping' Model of International Trade," NBER Working Papers 1194, National Bureau of Economic Research, Inc.
- James Brander & Paul Krugman, 1982. "A 'Reciprocal Dumping' Model of International Trade," Working Papers 513, Queen's University, Department of Economics.
- de Fraja, Giovanni & Delbono, Flavio, 1990. " Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
- 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
- de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-11, April.
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