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Strategic trade and industrial policy towards dynamic oligopolies
Author(s)
Date Issued
1998-07-21
Date Available
2011-07-25T14:06:55Z
Abstract
We characterize optimal trade and industrial policy in dynamic oligopolistic markets. If governments can commit to future policies, optimal first-period intervention should diverge from the profit-shifting benchmark to an extent which exactly offsets the strategic behaviour implied by Fudenberg and Tirole's "fat cats and top dogs" taxonomy of business strategies. Without government commitment, there is an additional basis for intervention, whose sign depends on the stategic substitutability between future policy and current actions. We consider a variety of applications (to R&D spillovers, consumer switching costs, etc.) and extensions to second-best, revenue-constrained and entry-promotion policies.
Sponsorship
Not applicable
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Series
UCD Centre for Economic Research Working Paper Series
WP98/14
Classification
F12
L13
Subject – LCSH
Commercial policy
Industrial policy
International trade
Oligopolies
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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