Industry Concentration and Strategic Trade Policy in Successive Oligopoly

32 Pages Posted: 7 Apr 2005

See all articles by Gjermund Nese

Gjermund Nese

Foundation for Research in Economics and Business Administration (SNF)

Odd Rune Straume

University of Minho - Economic Policies Research Unit (NIPE); CESifo (Center for Economic Studies and Ifo Institute)

Date Written: April 2005

Abstract

We study a policy game between exporting and importing countries in vertically linked industries. In a successive international Cournot oligopoly, we analyse incentives for using tax instruments strategically to shift rents vertically, between exporting and importing countries, and horizontally, between exporting countries. We show that the equilibrium outcome depends crucially on the relative degree of competitiveness in the upstream and downstream parts of the industry. With respect to national welfare, a more competitive upstream industry may benefit an exporting (upstream) country and harm an importing (downstream) country. On the other hand, a more competitive downstream industry may harm exporting countries.

Keywords: successive oligopoly, strategic trade policy, industry concentration

JEL Classification: F12, F13, L13

Suggested Citation

Nese, Gjermund and Straume, Odd Rune, Industry Concentration and Strategic Trade Policy in Successive Oligopoly (April 2005). Available at SSRN: https://ssrn.com/abstract=700673

Gjermund Nese

Foundation for Research in Economics and Business Administration (SNF) ( email )

Breiviksveien 40
Bergen, N-5045
Norway

Odd Rune Straume (Contact Author)

University of Minho - Economic Policies Research Unit (NIPE) ( email )

Campus de Gualtar
Braga, 4710-057
Portugal

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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