Learning by Doing, Precommitment and Infant-Industry Protection

Dermot Leahy and J. Peter Neary

No 980, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper examines the implications for strategic trade policy of different assumptions about precommitment. In a dynamic oligopoly game with learning by doing, the optimal first-period subsidy is lower if firms cannot precommit to future output than if they can; and is lower still if the government cannot precommit to future subsidies. In the linear case the optimal subsidy is increasing in the rate of learning with precommitment, but decreasing in it if the government cannot precommit. The infant-industry argument is thus reversed in the absence of precommitment, which has important implications for economic policy in dynamic environments.

Keywords: Infant-Industry Protection; Learning by Doing; Precommitment; Strategic Trade Policy; Time Consistency (search for similar items in EconPapers)
JEL-codes: F12 L13 L52 (search for similar items in EconPapers)
Date: 1994-07
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=980 (application/pdf)

Related works:
Working Paper: Learning by doing, precommitment and infant-industry protection (1994)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:980

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=980

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().