An Evaluation of Neutral Trade Policy Incentives Under Increasing Returns to Scale

Jaime de Melo and David Roland-Holst

Chapter 17 in Modeling Developing Countries' Policies in General Equilibrium, 2015, pp 367-383 from World Scientific Publishing Co. Pte. Ltd.

Abstract: New developments in the theory of international trade often suggest, implicitly or explicitly, that in an imperfectly competitive environment, government intervention may be needed to achieve optimality. The most celebrated example in this new literature is the profit-shifting argument of Brander and Spencer (1984). Another example, perhaps more widely applicable, is the argument developed by Krugman (1985) showing that protection can serve as an export promotion policy under certain circumstances. These arguments have fostered a literature on strategic trade theory, which deals with conditions of imperfect competition between international trading partners. The trade and development literature, on the other hand, concentrates on the implications of imperfectly competitive domestic markets…

Keywords: Applied General Equilibrium Models; Trade Policy; Computable General Equilibrium; Archetypes (search for similar items in EconPapers)
Date: 2015
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Working Paper: An evaluation of neutral trade policy incentives under increasing returns to scale (1990)
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