Optimal Trade and Industrial Policy under Oligopoly

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ID: 296578
1986
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Abstract
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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openalex_W3122511063 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Jonathan Eaton, Gene M. Grossman
Journal the quarterly journal of economics
Year 1986
DOI
10.2307/1891121
URL
Keywords Keywords not found

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