Intra-Industry Trade And Strategic Trade Police In The Presence of Public Firms

Debashis Pal () and Mark White ()

International Economic Journal, 2003, vol. 17, issue 4, 29-41

Abstract: The literature on intra-industry trade and strategic trade policy has always considered only profit-maximizing private firms being active in international trade. This paper incorporates state-owned public firms in the context of intra-industry trade. The existence of welfare-maximizing public firms significantly affects intra-industry trade and strategic trade policy. Compared to when both firms are private, the existence of public firms lowers optimal tariffs and subsidies, but also lowers the total volume of trade between the two countries. The lower volume of trade, however, does not translate into lower levels of welfare for the trading countries. [F12, F13, D43, L32]

Date: 2003
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DOI: 10.1080/751248070

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