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Strategic advertising policy in international oligopoly markets

Elizabeth Schroeder () and Victor J. Tremblay

The International Trade Journal, 2016, vol. 30, issue 1, 3-13

Abstract: Strategic trade policy has become an important tool used by countries to increase domestic welfare. Ma and Ulph (2012) further this discussion by analyzing strategic advertising policy in international oligopoly markets. They find that it is always optimal for a home government to subsidize advertising for exports, whether firms compete in a Cournot- or Bertrand-type game. By extending their analysis to include the Cournot-Bertrand model, we find that an advertising subsidy is not always optimal for the home country. In some cases, the optimal strategic policy is an advertising tax.

Date: 2016
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Handle: RePEc:taf:uitjxx:v:30:y:2016:i:1:p:3-13