Strategic Commercial Policy Revisited: A Supply-Function Equilibrium Model

Didier Laussel ()

American Economic Review, 1992, vol. 82, issue 1, 84-99

Abstract: The author considers a model in which one firm in each of two countries produces a homogeneous good and sells it exclusively to a third country. Each firm simultaneously selects a supply function before a demand shock occurs. The model assumes that the home government can precommit to a subsidy function. The optimal marginal subsidy rate is shown to decrease with domestic exports. This induces the firms to select steeper supply functions, thereby softening competition. The strategic complementarity between supply functions' slopes is the key to these results. Copyright 1992 by American Economic Association.

Date: 1992
References: Add references at CitEc
Citations: View citations in EconPapers (27)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: STRATEGIC COMMERCIAL POLICY REVISITED: A SUPPLY FUNCTION EQUILIBRIUM MODEL (1990)
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:aea:aecrev:v:82:y:1992:i:1:p:84-99

Ordering information: This journal article can be ordered from
https://www.aeaweb.org/journals/subscriptions

Access Statistics for this article

American Economic Review is currently edited by Esther Duflo

More articles in American Economic Review from American Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Michael P. Albert ().