Suchergebnisse

In this paper we examine how the conventional finding from de Meza (Canadian Journal of Economics, Vol. 19 (1986), pp. 347–350) and Neary (Journal of International Economics, Vol. 37 (1994), pp. 197–218) that the country with the lowest‐cost firm provides the highest subsidy modifies in a model of vertically related markets characterized by Cournot competition. We show that the country where the sum of the costs of final‐good production and intermediate‐good production are the lowest provides the largest production subsidies to the final good and/or the intermediate good.

ABSTRACTThis paper analyses how strategic export policies are affected by introducing an imperfectly competitive intermediate good into a Bertrand duopoly model with product differentiation, where a home and a foreign final‐good firm export to a third‐country market. It is shown that when the home and foreign markets for the intermediate good are segmented, the optimal export policy towards the final good is a tax. In contrast, under integrated markets, the optimal export intervention is a subsidy. Whether bilateral export intervention is welfare improving compared with free trade, depends on the degree of product differentiation between the home and foreign final goods.