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Regulatory Protection When Firms Move First

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Abstract

I investigate the imposition of a horizontal technical barrier to trade (HTBT) in a symmetric, cross-hauling duopoly. Tariffs and subsidies are ruled out, but, in the absence of a mutual recognition agreement, it is possible for governments to impose HTBTs, so long as firms apply different technologies. If firms are first movers, this possibility may induce them to avoid technical collaboration, in order to tempt governments into creating local monopolies, except where spillovers and R&D effects are high. This exacerbates the costs of regulatory protection, compared to standard models without R&D or spillovers.

Suggested Citation

  • T.Huw Edwards, 2009. "Regulatory Protection When Firms Move First," Discussion Paper Series 2009_19, Department of Economics, Loughborough University, revised Nov 2009.
    • Handle: RePEc:lbo:lbowps:2009_19
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    References listed on IDEAS

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    More about this item

    Keywords

    Research and development; spillovers; trade; protection.;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F19 - International Economics - - Trade - - - Other
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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