Export Subsidies and International Market Share Rivalry

Brander, James A.; Spencer, Barbara J.

doi:10.3386/w1464

Cited by 496 publications

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“…After the infant industry, the optimum tariff, and 'distortions' enters 'strategic trade policy,' as in particular propagated by Brander and Spencer (for example Spencer and Brander, 1983;Brander and Spencer, 1985;Brander, 1986). Strategic trade policy arose from the awareness that in imperfectly competitive international markets, different countries' firms competed for the shares of oligopoly profits or rents.…”

Section: Strategic Trade Policymentioning

confidence: 99%

International trade policy: Benevolent dictators and optimizing politicians

Hillman

1992

Public Choice

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other classical liberals, in expounding the benefits of free trade and comparative advantage, presented a view of how trade policy should be conducted that differed markedly from the mercantilist position. Mercantilism perceived trade policy to be a means of 'strengthening' the nation'. 'Strength' was to be achieved by a trade surplus that facilitated the accumulation of gold and wealth, which in turn provided the means of defense and also the means to increase wealth by conquest. The mercantilist view imparted a protectionist bias to trade policy -the objective was to export, and not to 'waste' resources on imports. Citizens were thus encouraged to sell but not to buy from foreigners. The liberal tradition that underlies the neo-classical model of international trade in contrast expounds the virtue of consumption of the foreigners' goods, and proposes free trade, production specialization, and reliance on the international market as the means whereby the citizens of a country can collectively maximize their consumption opportunities. In the classical model, voluntary exchange is by presumption welfare improving, independently of whether the exchange takes place with foreigners or with domestic residents; and protectionist policies that inhibit voluntary exchange are conversely welfare reducing. Classical exceptions to the case for free tradeThe infant-industry and optimum-tariff arguments were however recognized as exceptions that might justify a government's restricting international trade. These arguments are similar to more modern arguments that have been proInvited address, European Public Choice Society Meetings 1990.

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Section: Strategic Trade Policymentioning

confidence: 99%

International trade policy: Benevolent dictators and optimizing politicians

Hillman

1992

Public Choice

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“…To concentrate on domestic policy incentives and time consistency, and to avoid the well-known prisoners' dilemma results from policy interaction (cf. Brander and Spencer 1985), we shall assume that only the domestic government takes trade policy measures, i.e., we set sl # 0 and s2 = 0. To save space, however, we proceed with the more general notation, using s;.…”

Section: Optimal Output Subsidy In a Three-stage Gamementioning

confidence: 99%

A note on the time inconsistency of strategic trade policy

Welzel

1992

Open Econ Rev

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In a simple three-stage model of an international Cournot duopoly, optimal strategic trade policy is shown to be time inconsistent. If the domestic government first announces a production subsidy, firms then irrevocably commit resources to R&D, and finally play their output game, there is an incentive for the government to revise its ex ante optimal policy once R&D decisions have been made. If private agents anticipate this revision and if the government does not have the power to commit itself to the ex ante optimal policy, a credibility constraint has to be imposed. Copyright Kluwer Academic Publishers 1992commercial policy, strategic trade policy, time inconsistency,

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“…Many authors who analyze export subsidies under imperfect competition, such as Brander and Spencer (1985), de Meza (1986), Dixit and Grossman (1986) as well as Eaton and Grossman (1986), for the most part assume no home consumption. 2.…”

Section: Acknowledgmentmentioning

confidence: 99%

The incentive for export subsidies under imperfect competition

Tanaka

1991

Open Econ Rev

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By taking into account factor market interactions, the theory of strategic trade policies can consistently explain the fact that less efficient countries offer greater export subsidies to the most technologically advanced industries because in these countries there may be greater differences in efficiency of production technology between industries than in more efficient countries. Copyright Kluwer Academic Publishers 1991export subsidy, imperfect competition, difference in efficiency of technology,

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Export Subsidies and International Market Share Rivalry

Cited by 496 publications

References 0 publications

International trade policy: Benevolent dictators and optimizing politicians

International trade policy: Benevolent dictators and optimizing politicians

A note on the time inconsistency of strategic trade policy

The incentive for export subsidies under imperfect competition

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