How Strategic Trade Policy Leads to Mixed Cournot–Bertrand Competition?

Cassagnard Patrice and Thiam Mamadou
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Cassagnard Patrice: Université de Pau et des Pays de l’Adour E2S UPPA, CNRS, TREE, Pau, France
Thiam Mamadou: Université de Pau et des Pays de l’Adour E2S UPPA, CNRS, TREE, Pau, France†PRISM Sorbonne, Université Paris 1 Panthéon-Sorbonne, Paris, France

International Game Theory Review (IGTR), 2024, vol. 26, issue 01, 1-28

Abstract: This paper revisits the link between strategic trade policies and the mode of competition in the product market, emphasizing the emergence of a different mode of competition if only one of the two governments implements such a policy. We show that with an endogenous mode of competition and an asymmetric strategic export policy we can lead to a mixed Cournot–Bertrand competition between firms. If the game is sequential and the second government wishes to react to this policy, we show that the final equilibrium will be even more unfavorable to the newly protected national leader: the second firm would not prefer this retaliation to be implemented. This reinforces the interest of the asymmetrical framework of this model.

Keywords: Competition mode; Cournot–Bertrand; endogenization; trade (search for similar items in EconPapers)
JEL-codes: F1 F12 F13 F16 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1142/S0219198923500159

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