Domestic Content Requirements with Bilateral Monopoly

John Beghin () and Daniel Sumner

Oxford Economic Papers, 1992, vol. 44, issue 2, 306-16

Abstract: This short paper models physical content policies in a bilateral monopoly setting using a cooperative game approach. For just binding or nonbinding content requirements, the policy does not induce any deadweight loss but alters the profit distribution in favor of the domestic supplier. This result holds as long as the inputs concerned by the policy are good substitutes in production, and when the disagreement point corresponds to low content requirements and low marginal cost for the domestic input. Copyright 1992 by Royal Economic Society.

Date: 1992
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