Leahy, Dermot
(2000)
Strategic Trade and Industrial Policy Towards Dynamic Oligopolies.
Economic Journal, 110.
pp. 484-508.
ISSN 0013-0133
Abstract
The theory of strategic trade policy has grown from precocious urchin to
mature teenager and is now part of the central canon of international trade
theory. Much of its initial appeal came from the fact that it appeared to
provide a stronger justiÆcation for interventionist measures such as tariffs and
export subsidies than traditional competitive theory. However, as is now well
known, the specific policy recommendations of the theory are highly sensitive
to changes in assumptions about firm behaviour, entry, and so on. For this
reason, possibly a more important contribution of the theory is that it high-
lights a key aspect of public policy in oligopolistic markets: that governments
and firms are likely to differ in their ability to commit to future actions. Thus
the desirability of intervention, whether an export subsidy as in Brander and
Spencer (1985) or an export tax as in Eaton and Grossman (1986), derives
from the government's assumed ability to commit to policies which will remain
in force while firms take their decisions on outputs or prices. The optimal
policy moves the home firm to the point which it would attain unaided
if
it
had a Stackelberg first-mover advantage
| Item Type: |
Article
|
| Keywords: |
Strategic; Trade; Industrial Policy;
Dynamic; Oligopolies; |
| Academic Unit: |
Faculty of Social Sciences > Economics, Finance and Accounting |
| Item ID: |
8471 |
| Depositing User: |
Dermot Leahy
|
| Date Deposited: |
18 Jul 2017 14:00 |
| Journal or Publication Title: |
Economic Journal |
| Publisher: |
Wiley |
| Refereed: |
Yes |
| URI: |
|
| Use Licence: |
This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available
here |
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