Essays on trade barriers in imperfectly competitive markets
This dissertation contains three essays in strategic trade theory. They focus on the effects of trade barriers on the social welfare of an individual country through the effects of these barriers on the behavior of firms. Our analyses are undertaken in models with imperfectly competitive market structures. The assumption of imperfectly competitive market structures leads to certain conclusions that differ from those in the existing literature, where perfect competition is assumed. The first essay is a survey sampling recent papers dealing with the topics mentioned above. Specifically, we choose papers on trade barriers in imperfectly competitive markets, according to the types of models--static vs dynamic--and to the types of trade barriers--quotas, tariffs, voluntary export restraints, etc. We consider the case of almost every combination of the previous classifications. From this survey we find that once the assumption of perfect competition is removed, the outcome for a particular trade barrier depends critically on details of the model used. In the second essay, simple oligopolistic models are used to examine the welfare effects arising from a quota. The trade-off faced by a policymaker (concerned only with the welfare of his own country) when there is competition between foreign and domestic firms for a domestic market, is highlighted. Moreover, the impact of differing numbers of and cost differences between domestic and foreign firms is investigated. The third essay considers a repeated game with three players, two quantity-setting firms and one quota-setting government. In this model the differing effects of quotas and VERs on the actions of firms are explored. The focus is on how a quota (or the threat of a quota) can be used not only to break up collusive behavior but also to prevent the firms from colluding in the first place. Further, various ways in which quotas can be used by the government to actually improve on the static Cournot-Nash equilibrium outcome are examined. This last result is somewhat surprising since typically in quantity-setting trade models the static Cournot-Nash equilibrium (though second best) is the benchmark used to judge various outcomes (i.e. the closer to the C-N equilibrium, the better the outcome). Indeed, quotas are usually considered clumsy instruments, inferior to some other industrial policy. However, careful use of the threat potential inherent in quotas is shown to enforce outcomes which approach the competitive solution. ; Ph. D.