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Strategic Export Subsidies and Reciprocal Trade Agreements: The Natural Monopoly Case

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  • Bagwell, K.
  • Staiger, R.W.

Abstract

why do governments seek restrictions on the use of export subsidies through reciprocal trade agreements such as GATT? With existing arguments, it is possible to understand GATT's restrictions on export subsidies as representing an inefficient victory of the interests of exporting governments over the interests of importing governments. However, to our knowledge, there does not exist a formal theoretical treatment that provides circumstances under which GATT's restrictions on export subsidies can be given a world-wide efficiency rational. In this paper, we offer one such treatment in the context of a natural monopoly market

Suggested Citation

  • Bagwell, K. & Staiger, R.W., 1996. "Strategic Export Subsidies and Reciprocal Trade Agreements: The Natural Monopoly Case," Working papers 9605, Wisconsin Madison - Social Systems.
    • Handle: RePEc:att:wimass:9605
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    References listed on IDEAS

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    1. Bagwell, K. & Staiger, R.W., 1996. "Reciprocal Trade Liberalization," Working papers 9602, Wisconsin Madison - Social Systems.
    2. Varian, Hal R, 1980. "A Model of Sales," American Economic Review, American Economic Association, vol. 70(4), pages 651-659, September.
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    5. Jonathan Eaton & Gene M. Grossman, 1986. "Optimal Trade and Industrial Policy Under Oligopoly," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(2), pages 383-406.
    6. Kyle Bagwell & Garey Ramey, 1994. "Advertising and Coordination," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(1), pages 153-171.
    7. Bagwell, Kyle & Ramey, Garey, 1994. "Coordination Economies, Advertising, and Search Behavior in Retail Markets," American Economic Review, American Economic Association, vol. 84(3), pages 498-517, June.
    8. 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.
    9. Dixit, Avinash K & Kyle, Albert S, 1985. "The Use of Protection and Subsidies for Entry Promotion and Deterrence," American Economic Review, American Economic Association, vol. 75(1), pages 139-152, March.
    10. Maggi, Giovanni, 1996. "Strategic Trade Policies with Endogenous Mode of Competition," American Economic Review, American Economic Association, vol. 86(1), pages 237-258, March.
    11. repec:hoo:wpaper:e-92-1 is not listed on IDEAS
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    Cited by:

    1. Kyle Bagwell & Robert W. Staiger, 2001. "Strategic Trade, Competitive Industries and Agricultural Trade Disputes," Economics and Politics, Wiley Blackwell, vol. 13(2), pages 113-128, July.
    2. Uwe Dulleck, 2005. "WTO's Anti-dumping Rule and the Protection of Incumbents," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(2), pages 229-239.
    3. Steffen Huck & Kai A. Konrad & Wieland Müller, 2000. "Merger in Contests," CESifo Working Paper Series 241, CESifo.
      • Huck, Steffen & Konrad, Kai A. & Müller, Wieland, 2000. "Merger in contests," SFB 373 Discussion Papers 2000,3, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    4. 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.
    5. Jost, Peter-J. & van der Velden, Claus, 2008. "Organizational design of R&D after mergers and the role of budget responsibility," Journal of Economics and Business, Elsevier, vol. 60(5), pages 469-484.
    6. Bagwell, Kyle & Staiger, Robert W., 2001. "Reciprocity, non-discrimination and preferential agreements in the multilateral trading system," European Journal of Political Economy, Elsevier, vol. 17(2), pages 281-325, June.
    7. Yu-Ter Wang, 2003. "Export Subsidy Competition And The Wto Agreement," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 28(1), pages 23-34, June.
    8. Jost, Peter-J., 2011. "Joint ventures in patent contests with spillovers and the role of strategic budgeting," Journal of Economics and Business, Elsevier, vol. 63(6), pages 605-637.
    9. Bagwell,K. & Staiger,R.W., 2004. "Subsidy agreements," Working papers 1, Wisconsin Madison - Social Systems.
    10. Steffen Huck & Kai A. Konrad & Wieland Müller, 2002. "Merger and Collusion in Contests," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 158(4), pages 563-575, December.
    11. David Collie, 2000. "A Rationale for the WTO Prohibition of Export Subsidies: Strategic Export Subsidies and World Welfare," Open Economies Review, Springer, vol. 11(3), pages 229-245, July.
    12. Conconi, Paola, 2000. "Trade Bloc Formation Under Imperfect Competition," Economic Research Papers 269342, University of Warwick - Department of Economics.
    13. Konrad, Kai A., 2000. "Trade contests," Journal of International Economics, Elsevier, vol. 51(2), pages 317-334, August.
    14. Uwe Dulleck, 2005. "WTO's Anti-dumping Rule and the Protection of Incumbents," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(2), pages 229-239.

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    More about this item

    Keywords

    INTERNATIONAL TRADE; INTERNATIONAL AGREEMENTS; MONOPOLIES; COMPETITION;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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