Strategic trade policy with endogenous choice of quality and asymmetric costs

• 成果类型: Article
• 署名作者: Zhou, DS; Spencer, BJ; Vertinsky, I
• 署名单位: University of British Columbia; City University of Hong Kong; University of British Columbia
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(01)00118-0
• 发表日期: 2002
• 页码: 205-232
• 关键词: investment in quality; strategic tirade policy; R&D subsidies; vertical product differentiation

摘要

This paper examines strategic trade and joint welfare maximizing incentives towards investment in the quality of exports by an LDC and a developed country. Firms first compete in qualities and then export to an imperfectly competitive, third country market. Under Bertrand competition, unilateral policy involves an investment subsidy by the low-quality LDC and an investment tax by the developed country, whereas jointly optimal policy calls for the reverse so as to reduce price competition by increasing product differentiation. Under Cournot competition, unilateral policy is also reversed from the Bertrand outcome, but jointly optimal policy involves a tax in both countries. (C) 2002 Elsevier Science B.V. All rights reserved.