IDEAS home Printed from https://ideas.repec.org/p/koe/wpaper/2404.html
   My bibliography  Save this paper

Trade warfare revisited: Trade and industrial policies when exporting and non-exporting firms co-exist

Author

Listed:
  • Kazuhiro Takauchi

    (Faculty of Business and Commerce, Kansai University Graduate School of Economics, Kobe University)

  • Hajime Sugeta

    (Faculty of Economics, Kansai University Graduate School of Economics, Kobe University)

  • Tomomichi Mizuno

    (Graduate School of Economics, Kobe University)

Abstract

This paper establishes a two-country, oligopoly trade model in which exporting firms and less-efficient non-exporting firms exist in each country, and firms have quadratic costs. Governments in the two countries conduct policy games involving various combinations of policy tools, including tariffs, production subsidies and export tax/subsidies. We show that the optimal policies have single-peaked relationships with the productivity differences between non-exporting and exporting firms. For example, because tariff can have either a U-shaped or an inverted U-shaped relationship with the productivity difference between firms depending upon other policy instruments available to the governments, improving the efficiency of the non-exporting firm can inhibit trade liberalisation. We also show that if each country can choose a discriminatory production subsidy policy, no trade occurs. Thus, combined trade and industrial policies may induce the decoupling of economies.

Suggested Citation

  • Kazuhiro Takauchi & Hajime Sugeta & Tomomichi Mizuno, 2024. "Trade warfare revisited: Trade and industrial policies when exporting and non-exporting firms co-exist," Discussion Papers 2404, Graduate School of Economics, Kobe University.
  • Handle: RePEc:koe:wpaper:2404
    as

    Download full text from publisher

    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2024/2404.pdf
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:koe:wpaper:2404. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kimiaki Shirahama The email address of this maintainer does not seem to be valid anymore. Please ask Kimiaki Shirahama to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/fekobjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.