THE PROFITS OF FIRMS AND COUNTERVAILING DUTIES IN VERTICALLY RELATED MARKETS

Yu-Ter Wang ()
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Yu-Ter Wang: Department of Economics, Ming Chuan University, Taiwan

The Singapore Economic Review (SER), 2010, vol. 55, issue 04, 749-756

Abstract: This paper studies the relationship between the profits of firms and countervailing duties in vertically related markets characterized by oligopolies. It is shown that a countervailing duty equal to the foreign export subsidy is required to neutralize the impact of foreign export subsidies on the profits of domestic firms. The domestic country has an incentive to impose a countervailing duty on foreign final goods even though foreign governments only subsidize exports of intermediate goods. In addition, foreign exporting firms may benefit from a countervailing duty more than a foreign export subsidy.

Keywords: Profits; countervailing duties; foreign export subsidies; vertically related markets; F12; F13; L13 (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1142/S0217590810004036

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