Economics at your fingertips  


Colin Carter () and Donald MacLaren

No 51223, Working Papers from International Agricultural Trade Research Consortium

Abstract: It has been shown in new trade theory that trade taxes/subsidies may be optimal in the case of oligopolistic markets. This result has relevance for international commodity markets because there is growing evidence of imperfect competition in commodity trade. However, it has also been demonstrated that the optimal strategic trade policy depends on whether the market is distinguished by Bertrand (price) or Cournot (quantity) competition. We argue that commodity markets may be characterised by either form of imperfect competition and also by product differentiation. As an illustration, we present a set of models of the Japanese market for beef imports in which account is taken of various forms of strategic interaction between Australian and United States exports. The model which best fits the data is a Stackelberg model with price leadership by Australia. This result casts doubt on the approach taken in past empirical work on commodity markets in which quantity competition has been routinely imposed and it also suggests that if trade policy intervention is warranted, then export taxes may be preferred to export subsidies.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 37
Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link) (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.22004/ag.econ.51223

Access Statistics for this paper

More papers in Working Papers from International Agricultural Trade Research Consortium Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().

Page updated 2023-03-26
Handle: RePEc:ags:iatrwp:51223