Author: Publisher:
ISBN:
Category :
Languages : en
Pages : 28
Book Description
Strategic Trade Policy when Domestic Firms Compete Against Vertically Integrated Rivals
Author: Strategic Trade Policy when Domestic Firms Compete Against Vertically Integrated Rivals
Author: Dani RodrikPublisher:
ISBN:
Category : Commercial policy
Languages : en
Pages : 44
Book Description
This paper models the international competition between a domestic firm and its vertically integrated foreign rival. The domestic firm has the choice of developing its own production capability for an intermediate input, or of importing it from the foreign firm at a price set by the latter. In this setting, and under reasonable cost assumptions, the foreign firm will always choose to supply the domestic firm as long as it cannot monopolize the final-good market by withholding supply. A tariff placed on the imports of the input by the home government will be borne entirely by the foreign firm, and will be welfare increasing. When the home government chooses to subsidize the domestic firm's fixed development costs for the input, the optimal subsidy will exceed the total fixed costs required, but will not have to be disbursed in equilibrium. A tariff on the final good will enhance the home firm's profits not only by increasing the costs of its rival, but also by reducing its own input costs.
Strategic trade policy when domestic firms compete againts vertically integrated rivals
Author: Dani RodrikTrade and Protection in Vertically Related Markets
Author: Barbara J. SpencerPublisher:
ISBN:
Category : Commercial policy
Languages : en
Pages : 52
Book Description
A domestic firm is partially dependent on a foreign vertically integrated supplier for a key intermediate product when both firms are Cournot competitors in the market for the final product. The foreign supplier generally charges its domestic rival a price for the input that exceeds the independent monopoly level and vertical foreclosure may occur. Domestic policies applied to the vertically related products can increase domestic welfare by reducing the price and increasing the availability of imported supplies of the input. Vertical integration in the foreign supplier has significant implications for all three domestic policies considered: a tariff or subsidy on imports of both products and a domestic production subsidy. The foreign vertically integrated firm tends to reduce its price for the input in response to an import tariff on the final product, whereas a simple monopoly supplier would respond by increasing its export price. Also domestic cost conditions for the production of the input can critically affect the desirability of a tax as apposed to a subsidy on intermediate imports.
Export Activity and Strategic Trade Policy
Author: Horst KrägerPublisher: Springer Science & Business Media
ISBN: 3642846858
Category : Business & Economics
Languages : en
Pages : 188
Book Description
New theories of international trade suggest that pro- tectionism can make sense. This finding depends on the in- troduction of market power and increasing returns to scale into the international trade theory. The enormous political implications of this hypothesis have started a large interest in applied or empirical investigations of this issue. However, econometric work in international trade is comparatively scarce, especially if it comes to testing with individual data. Therefore, this volume is considered to be a contribution to fill that gap. The volume consists of three parts: First, issues in strategic trade are discussed by means of a survey on recent contributions of the literatureand by a simulation excercise on optimal trade policy for imperfectly competitive industries. Second, a part investigating the determinants of trade flows studies the interrelationships between trade balances and exchange rates, plant size and international trade, and the revelance offirm size and market concentration for the degree of export market integration using business survey firm data. Third, there are studies on imperfect markets, innovations and learning which demonstrate the importanceof imperfect competition for international economics. All contributions provide empirical evidence for the revelance of the newly developed trade theories and demonstrate useful quantitative techniques for their investigation.
Strategic Trade Policies with Uncertainty about the Mode of Inter-firm Competition
Author: Giovanni MaggiUnwanted Company
Author: Jonathan CrystalPublisher: Cornell University Press
ISBN: 1501723618
Category : Political Science
Languages : en
Pages : 246
Book Description
In the last quarter century, the U.S. economy has been transformed by a large inflow of direct investment from abroad. Foreign companies, mainly from Europe and Japan, have built factories and acquired U.S. firms at an ever-increasing rate. Jonathan Crystal finds inconsistencies in how American businesses have responded to this globalization of production.U.S. firms, especially multinationals, have conflicting interests regarding investment protection, Crystal shows. Many American firms, under siege from overseas competitors, have already expended considerable energy in obtaining trade protection, but they are competing not only with foreign imports but also with locally established foreign-owned firms. American businesses may favor stricter regulation of foreign companies that threaten their bottom line, but they also consider their own interests as global investors subject to retaliatory protection in other countries. Restrictions on "foreign" investment, it seems, are not so attractive when they are imposed by other countries.Unwanted Company examines the different ways in which important U.S. industries (including semiconductors, automobiles, steel, consumer electronics, telecommunications, and airlines) reacted to this new challenge. It focuses on the political responses of U.S.-owned firms to how Washington ought to regulate foreign direct investment and how it ought to treat foreign-owned firms in the United States. Some industries welcomed (or at least didn't oppose) foreign investment, whereas others sought restrictive and discriminatory policies. Crystal demonstrates how the nature of the domestic political environment shapes the translation of economic interests into policy preferences.
Imperfect Competition And Political Economy
Author: Colin CarterPublisher: CRC Press
ISBN: 0429694474
Category : Science
Languages : en
Pages : 270
Book Description
This book presents International Agricultural Trade Research Consortium commissioned papers. The papers systematically explore the conceptual and empirical dimensions of the new trade theory and try to determine the potential application to agricultural trade and trade policy analysis.
Uncertainty Resolution and Strategic Trade Policy in Oligopolistic Industries
Author: Mustafa O. CaglayanPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
This paper investigates a government's choice of strategic trade policy when the domestic firm observes a private noisy signal about the stochastic market demand while in competition with a rival firm. The government chooses between quantity controls and subsidies to maximize profits of the domestic firm. Assuming that firms compete a la Cournot in a third country, we show that the optimal trade policy depends not only on demand uncertainty but also on the predictability of the true market demand by the firms.
Market Dominance and Antitrust Policy
Author: Michael A. UttonPublisher: Edward Elgar Publishing
ISBN: 1843767481
Category : Business & Economics
Languages : en
Pages : 342
Book Description
Market dominance - encompassing single firm dominance, overt and tacit collusion, mergers and vertical restraints - raises many complex analytical and policy issues, all of which continue to be the subject of theoretical research and policy reform. This second edition of a popular and comprehensive text extends the arguments and combines an analysis of the issues with a discussion of actual policy and case studies. This new edition addresses the recent fundamental changes in antitrust law, especially in the UK and the EU, and reviews some high profile and controversial cases such as the Boeing-McDonnell Douglas merger and the Microsoft monopoly. The author moves on to deal with several unresolved questions including the conflicts between trade and antitrust policy, the foreign take-over of domestic assets and extra-territorial claims made by certain countries.