ENDOGENOUS MARKET STRUCTURES AND STRATEGIC TRADE POLICY*

Strategic Trade Policy under Uncertainty

This paper extends the Brander-Spencer (1985) model by considering market uncertainty, exploring nonlinear policy, and examining ̄rms' choices of strategic variables. By investigating the interrelationship between trade policy and market conduct, we ̄nd that unlike the oftenstudied linear policy, a nonlinear policy can in°uence the domestic ̄rm's choice of strategic variables and hence alter th...

Vertical structure and strategic environmental trade policy

The idea that environmental trade policy can be used to achieve competitive advantage in international markets has important implications for the way we conceive free trade. This paper considers strategic environmental policy in a model that makes explicit the vertical structure that supports production of the traded good. Including intranational vertical relationships in the analysis of strate...

Strategic Interaction, Trade Policy, and National Welfare

Strategic Trade Policy with Polynomial Costs

ÿWe investigate how the superiority of the optimal subsidy or tariff in an international Cournot oligopoly depends on the production technology used in the industry, an interesting issue that has not been analyzed in the literature. We establish that the welfare superiority of the optimal subsidy or tariff depends on the relative steepness of the firms’ common marginal cost curve: when it is re...

Optimal Strategic Trade Policy under Asymmetric Information

When cost is private information in the Brander{Spencer model, the home government is confronted by a decision of choosing between two policy options: a menu of policies and a uniform policy. The former induces separation and so reveals the cost information to the foreign competitors. The latter helps the weak ̄rm by concealing the cost information. The main result from this study is that polic...