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Optimal Trade and Industrial Policy under Oligopoly
Open accessAbstract
We analyze the welfare effects of trade and industrial policy under oligopoly, and characterize optimal intervention under a variety of assumptions about market structure and conduct. When all output is exported, optimal policy with a single home firm depends on the difference between foreign firms' actual responses to the home firm's actions and the responses that the home firm conjectures. A subsidy often is indicated for Cournot behavior, but a tax generally is optimal if firms engage in Bertrand competition. If conjectures are “consistent,” free trade is optimal. With domestic consumption, intervention can raise national welfare by reducing the deviation of price from marginal cost.
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Citations
Cited by
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Krugman, P. (1987) · Journal of Development Economics · doi:10.1016/0304-3878(87)90005-8 · Cited by 1,172
Trade, Foreign Investment, and Industrial Policy for Developing Countries*
Harrison, A., & Rodríguez-Clare, A. (2010) · Handbook of Development Economics · doi:10.1016/b978-0-444-52944-2.00001-x · Cited by 595
Endogenous market structures in international trade (natura facit saltum)
Horstmann, I. J., & Markusen, J. R. (1992) · Journal of International Economics · doi:10.1016/0022-1996(92)90038-l · Cited by 528
Environmental Policy when Market Structure and Plant Locations Are Endogenous
Markusen, J. R., Morey, E. R., & Olewiler, N. D. (1993) · Journal of Environmental Economics and Management · doi:10.1006/jeem.1993.1005 · Cited by 295
Bagwell, K., Bown, C. P., & Staiger, R. W. (2016) · Journal of Economic Literature · doi:10.1257/jel.20151192 · Cited by 122
Metadata
- Authors
- Eaton, J., & Grossman, G. M.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1986-05
- Volume
- 101
- Issue
- 2
- Pages
- 383
- ISSN
- 0033-5533 (ISSN-L)
- OpenAlex
- W2890237018
- Cited by
- 1,119
- References
- 0
- FWCI
- 86.69
- Type
- journal article
- Language
- en
- Open access
- green
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