Strategic trade and industrial policy towards dynamic oligopolies

J. Peter Neary and Dermot Leahy

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this paper characterise optimal trade and industrial policy in dynamic oligopolistic markets. If governments can commit to future policies, optimal first-period intervention should diverge from the profit-shifting benchmark to an extent which exactly offsets the strategic behaviour implied by Fudenberg and Tirole''s "fat cats and top dogs" taxonomy of business strategies. Without government commitment, there is an additional basis for intervention, whose sign depends on the strategic substitutability between future policy and current actions. We consider a variety of applications (to R&D spillovers, consumer switching costs, etc.) and extensions to second-best, revenue-constrained and entry-promotion policies.

Keywords: Learning by Doing; R&D Subsidies; Strategic Trade Policy; Export Subsidies; Commitment; Dynamic Consistency (search for similar items in EconPapers)
JEL-codes: J01 L81 R14 (search for similar items in EconPapers)
Pages: 40 pages
Date: 1998-11
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http://eprints.lse.ac.uk/20246/ Open access version. (application/pdf)

Related works:
Journal Article: Strategic Trade and Industrial Policy towards Dynamic Oligopolies (2000)
Working Paper: Strategic Trade and Industrial PolicyTowards Dynamic Oligopolies (1998)
Working Paper: Strategic Trade and Industrial Policy Towards Dynamic Oligopolies (1998)
Working Paper: Strategic Trade and Industrial Policy Towards Dynamic Oligopolies (1998)
Working Paper: Strategic trade and industrial policy towards dynamic oligopolies (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:20246

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