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Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India Trade

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  • Irwin, Douglas A

Abstract

This paper interprets seventeenth-century mercantilism, when international trade was conducted chiefly by state-chartered monopoly trading companies, in light of recent theories of strategic trade policy. The Anglo-Dutch rivalry for the East India trade illustrates a case in which the profit-shifting motive for strategic trade policies exists. Dutch supremacy in the early East India trade was facilitated by a managerial incentive scheme in the monopoly charter that enabled it to achieve a Stackelberg leadership position. Data from the East India trade around 1620 are used in a Cournot duopoly model to examine the possible effects of other policies. Copyright 1991 by University of Chicago Press.

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  • Irwin, Douglas A, 1991. "Mercantilism as Strategic Trade Policy: The Anglo-Dutch Rivalry for the East India Trade," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1296-1314, December.
    • Handle: RePEc:ucp:jpolec:v:99:y:1991:i:6:p:1296-314
    DOI: 10.1086/261801
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    1. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-940, December.
    2. Steven D. Sklivas, 1987. "The Strategic Choice of Managerial Incentives," RAND Journal of Economics, The RAND Corporation, vol. 18(3), pages 452-458, Autumn.
    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.
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    5. Kevin H. O'Rourke & Jeffrey G. Williamson, 2009. "Did Vasco da Gama matter for European markets?1," Economic History Review, Economic History Society, vol. 62(3), pages 655-684, August.
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    15. Hendrik P. van Dalen & Aico P. van Vuuren, 2003. "Greasing the Wheels of Trade," Tinbergen Institute Discussion Papers 03-066/1, Tinbergen Institute.
    16. Williamson, Jeffrey G., 2013. "The Commodity Export, Growth, and Distribution Connection in Southeast Asia 1500-1940," CEPR Discussion Papers 9364, C.E.P.R. Discussion Papers.
    17. Keith Head & Barbara J. Spencer, 2017. "Oligopoly in international trade: Rise, fall and resurgence," Canadian Journal of Economics, Canadian Economics Association, vol. 50(5), pages 1414-1444, December.
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