Strategic trade and industrial policy towards dynamic oligopolies

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Title: Strategic trade and industrial policy towards dynamic oligopolies
Authors: Neary, J. Peter
Leahy, Dermot
Permanent link: http://hdl.handle.net/10197/3043
Date: 21-Jul-1998
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.
Funding Details: Not applicable
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP98/14
Keywords: Learning by doingR&D subsidiesStrategic trade policyExport subsidiesCommitmentDynamic consistency
Subject LCSH: Commercial policy
Industrial policy
International trade
Oligopolies
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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