Trade policies, time consistency, quality reversals and exit in vertically integrated industries
| Autor: | Herguera, Iñigo, Kujal, Praveen, Petrakis, Emmanuel |
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| Přispěvatelé: | Universidad Carlos III de Madrid. Departamento de Economía |
| Jazyk: | angličtina |
| Rok vydání: | 2000 |
| Předmět: | |
| Zdroj: | e-Archivo. Repositorio Institucional de la Universidad Carlos III de Madrid instname |
| Popis: | The impact of strategic trade policies, such as import tariffs and domestic output subsidies, is studied in a vertically differentiated duopoly. Firms first choose quality and then compete in quantities or prices in the home market. If the government is unable to commit to a policy the domestic firm then chooses its quality strategically in order to alter the market structure in its favor. Time consistent subsidies are always positive and result in a domestic monopoly as the foreign firm exits the market. Time consistent tariffs are also positive and ensure that the domestic firm always produces the high quality good. Commitment to a subsidy results in greater domestic welfare than under non-commital. Except for the case when, under price competition and the domestic firm producing the low quality good under free trade, non-commital under tariffs by the domestic government is welfare improving. |
| Databáze: | OpenAIRE |
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