I characterize the optimal export promoting policy for international markets whose structure is endogenous. Contrary to the ambiguous results of strategic trade policy for duopolies, it is always optimal to subsidize exports when entry is endogenous, under both quantity and price competition. With homogenous goods the optimal export subsidy is a fraction 1/epsilon of the price, where epsilon is the elasticity of demand (the exact opposite of the optimal export tax in the neoclassical trade theory). Analogously, I show the general optimality of R&D subsidies and of competitive devaluations to promote exports in foreign markets where entry is endogenous

Etro, F. (2011). Endogenous market structures and strategic trade policy. INTERNATIONAL ECONOMIC REVIEW, 52(1), 63-84 [10.1111/j.1468-2354.2010.00619.x].

Endogenous market structures and strategic trade policy

Etro, F
2011

Abstract

I characterize the optimal export promoting policy for international markets whose structure is endogenous. Contrary to the ambiguous results of strategic trade policy for duopolies, it is always optimal to subsidize exports when entry is endogenous, under both quantity and price competition. With homogenous goods the optimal export subsidy is a fraction 1/epsilon of the price, where epsilon is the elasticity of demand (the exact opposite of the optimal export tax in the neoclassical trade theory). Analogously, I show the general optimality of R&D subsidies and of competitive devaluations to promote exports in foreign markets where entry is endogenous
Articolo in rivista - Articolo scientifico
Endogenous market structures
English
63
84
22
Etro, F. (2011). Endogenous market structures and strategic trade policy. INTERNATIONAL ECONOMIC REVIEW, 52(1), 63-84 [10.1111/j.1468-2354.2010.00619.x].
Etro, F
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/6138
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