What Information is Needed for Welfare-Enhancing Policies under International Oligopoly?

Taiji Furusawa, Keisaku Higashida and Jota Ishikawa

Chapter 10 in Strategic Trade Policy, 2026, pp 231-253 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In the framework of international Cournot oligopoly, we analyze welfare-enhancing policies when policymakers have only limited information on demand and cost structures. We show that even if policymakers have no idea about costs and demand, they can raise welfare by introducing a small production subsidy. If the government knows that demand is not very convex, a small tariff can be used to enhance welfare. With strategic complements, a small import reduction by an import quota deteriorates welfare while a small increase in the number of domestic firms improves welfare. In other cases, some more information is required to determine right policies.

Keywords: Strategic Trade Policy; Rent-shifting; Monopoly; Oligopoly; Oligopsony; Trade Liberalization; Trade Costs; Tariffs; Subsidies; Foreign Direct Investment; Outsourcing; Segmented Markets; Integrated Markets; Intermediate Products; Vertical Market Structure; Information (search for similar items in EconPapers)
JEL-codes: F1 F10 F13 L1 (search for similar items in EconPapers)
Date: 2026
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