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    Learning by Doing, Precommitment and Infant-Industry Promotion

    Leahy, Dermot (1999) Learning by Doing, Precommitment and Infant-Industry Promotion. Review of Economic Studies, 66. pp. 447-474. ISSN 0034-6527

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    We examine the implications for strategic trade policy of different assumptions about precommitment in a two-period Cournot oligopoly game with learning by doing. The inability of firms and governments to precommit to future actions encourages strategic behaviour which justifies an optimal first-period export tax relative to the profit-shifting benchmark of an export subsidy. In the linear case the optimal subsidy is increasing in the rate of learning with government precommitment but decreasing in it without, in apparent contradiction to the infant-industry argument. Extensions to active foreign policy, distortionary taxation and Bertrand competition are also considered.

    Item Type: Article
    Keywords: Learning; Doing; Precommitment; Infant-Industry; Promotion;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 8474
    Depositing User: Dermot Leahy
    Date Deposited: 18 Jul 2017 14:35
    Journal or Publication Title: Review of Economic Studies
    Publisher: Oxford University Press
    Refereed: Yes
    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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