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Product differentiation and the export subsidy dispute

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  • Yu-Ter Wang

Abstract

In a Cournot duopoly market, this paper studies the role of product differentiation in the resolution of the export subsidy dispute. It is shown that the optimal export subsidy decreases with the degree of product differentiation and the export subsidy will be eliminated completely when the competitive goods are made perfectly different. Furthermore, increasing the degree of product differentiation will also increase the profits of the firms and the welfare of the exporting countries.

Suggested Citation

  • Yu-Ter Wang, 2006. "Product differentiation and the export subsidy dispute," Applied Economics Letters, Taylor & Francis Journals, vol. 13(14), pages 943-945.
    • Handle: RePEc:taf:apeclt:v:13:y:2006:i:14:p:943-945
    DOI: 10.1080/13504850500426012
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    References listed on IDEAS

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    1. Dixit, Avinash, 1988. "Anti-dumping and countervailing duties under oligopoly," European Economic Review, Elsevier, vol. 32(1), pages 55-68, January.
    2. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
    3. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    4. K. Oustapassidis & A. Vlachvei, 1999. "Profitability and product differentiation in Greek food industries," Applied Economics, Taylor & Francis Journals, vol. 31(10), pages 1293-1298.
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    Cited by:

    1. Yu-Ter Wang, 2007. "The number of firms, international product differentiation and an import tariff," Applied Economics Letters, Taylor & Francis Journals, vol. 14(14), pages 1087-1089.
    2. Yu-Ter Wang, 2009. "On the simultaneous elimination of export subsidies under oligopoly," Applied Economics, Taylor & Francis Journals, vol. 41(5), pages 629-631.

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