Strategic Trade Policy / James A. Brander.

By:

Brander, James A

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w5020.Publication details: Cambridge, Mass. National Bureau of Economic Research 1995.Description: 1 online resource: illustrations (black and white)Subject(s):

F10 - General

Online resources:

Available additional physical forms:

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Abstract: This paper reviews the literature on strategic trade policy. Strategic trade policy is defined as trade policy that conditions or alters a strategic relationship between firms, implying that strategic trade policy focuses primarily on trade policy in the presence of oligopoly. The key point is that strategic relationships between firms introduce additional motives for trade policy, over and above terms of trade and other effects that arise in all market structures. I demonstrate this general point using a simple game theoretic framework, then present the major results of strategic trade policy using two models: the 'third market' model, in which oligopolistic firms in two exporting nations export the good in question exclusively to a third country; and the 'reciprocal markets' model, in which firms in two countries compete in each others' markets. The paper makes the well-known point that slight differences in model structure can give rise to strikingly different trade policy implications, but also seeks to emphasize the robust general points that emerge from the literature.

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Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w5020 (Browse shelf(Opens below))	Not For Loan

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February 1995.

This paper reviews the literature on strategic trade policy. Strategic trade policy is defined as trade policy that conditions or alters a strategic relationship between firms, implying that strategic trade policy focuses primarily on trade policy in the presence of oligopoly. The key point is that strategic relationships between firms introduce additional motives for trade policy, over and above terms of trade and other effects that arise in all market structures. I demonstrate this general point using a simple game theoretic framework, then present the major results of strategic trade policy using two models: the 'third market' model, in which oligopolistic firms in two exporting nations export the good in question exclusively to a third country; and the 'reciprocal markets' model, in which firms in two countries compete in each others' markets. The paper makes the well-known point that slight differences in model structure can give rise to strikingly different trade policy implications, but also seeks to emphasize the robust general points that emerge from the literature.