Endogenous trade policy under foreign direct investment

• 成果类型: Article
• 署名作者: Konishi, H; Saggi, K; Weber, S
• 署名单位: Southern Methodist University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(98)00066-X
• 发表日期: 1999
• 页码: 289-308
• 关键词: Trade policy; Tariff; VER; lobbying; Foreign direct investment

摘要

Using Bernheim and Whinston (1986) common agency game, we endogenize trade policy in a duopoly composed of a domestic firm and a foreign firm, where both firms influence the domestic government's trade policy via their contributions. The foreign firm can jump over trade restrictions by undertaking foreign direct investment (FDI) in the domestic market. The government prefers a voluntary export restraint (VER) to a tariff for two reasons. First, a VER leads to higher contributions from the foreign firm than a tariff. Second, a VER provides a higher level of protection to the domestic firm without generating FDI by the foreign firm. (C) 1999 Elsevier Science B.V. All rights reserved. JEL classification: F12; F13; F23.