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Strategic Trade Policy under Uncertainty

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  • Qiu, Larry D

Abstract

This paper extends the Brander-Spencer (1985) model by considering market uncertainty, exploring nonlinear policy, and examining firms' choices of strategic variables. By investigating the interrelationship between trade policy and market conduct, we find that unlike the often-studied linear policy, a nonlinear policy can influence the domestic firm's choice of strategic variables and hece alter the market conduct in favor of the domestic country. Therefore, a nonlinear policy proves strictly superior to a linear one. Copyright 1995 by Blackwell Publishing Ltd.

Suggested Citation

  • Qiu, Larry D, 1995. "Strategic Trade Policy under Uncertainty," Review of International Economics, Wiley Blackwell, vol. 3(1), pages 75-85, February.
    • Handle: RePEc:bla:reviec:v:3:y:1995:i:1:p:75-85
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    Cited by:

    1. Mesa, Fernando & Perilla, Juan Ricardo, 2007. "Exportaciones y políticas comerciales óptimas para la industria textil y de confecciones. Casos de Colombia y México, 1990-2002," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(293), pages 195-221, enero-mar.
    2. Chao‐Cheng Mai & Shih‐Chuan Lin, 2021. "The effects of uncertainties over R&D policy or market demand on R&D levels," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 1048-1056, June.
    3. Desai, Mihir A. & Hines Jr., James R., 2008. "Market reactions to export subsidies," Journal of International Economics, Elsevier, vol. 74(2), pages 459-474, March.
    4. Mustafa Caglayan & Murat Usman, 2004. "Incompletely informed policymakers and trade policy in oligopolistic industries," Manchester School, University of Manchester, vol. 72(3), pages 283-297, June.
    5. Keisuke Hattori & Keisaku Higashida, 2011. "When Government Misleads US: Sending Misinformation as Protectionist Devices," Discussion Paper Series 75, School of Economics, Kwansei Gakuin University, revised Aug 2011.
    6. Fabio Antoniou & Nikos Tsakiris, 2014. "Information and Disclosure in Strategic Trade Policy: Revisited," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 415-427, September.
    7. Yoshino, Hisao, 2011. "Strategic trade policy and non-linear subsidy : in the case of price competition," IDE Discussion Papers 287, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    8. Glass, Amy Jocelyn & Saggi, Kamal, 1999. "FDI policies under shared factor markets," Journal of International Economics, Elsevier, vol. 49(2), pages 309-332, December.
    9. Fernando MESA PARRA, 2001. "Strategic Trade Policy and Exchange Rate Uncertainty," Archivos de Economía 3527, Departamento Nacional de Planeación.
    10. Aditya Bhattacharjea, 2002. "Infant Industry Protection Revisited," International Economic Journal, Taylor & Francis Journals, vol. 16(3), pages 115-133.

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