Horizontal Regulatory Protection. Its appeal and implictions in a linear Cournot duopoly

Terence Edwards

Discussion Paper Series from Department of Economics, Loughborough University

Abstract: I set up a linear model of a cross-hauling, Cournot duopoly. Even where countries are small, there exists a motive for protection to achieve a profit-shift and to raise revenue. Where the protection is of tariff form, then the protection will only totally exclude the foreign firm for a limited set of parameter values. By contrast, where the protection takes the form of a horizontal technical barrier to trade (HTBT), the government will always exclude the foreign firm. Where there is no constraint on imposing tariffs, these will always be preferred to the HTBT. However, if tariff reductions are imposed by international agreement without simultaneous restrictions on HTBTs, then reductions below a threshold level will trigger imposition of an HTBT sufficient to totally exclude the foreign firm.

Keywords: : Duopoly; trade; protection. (search for similar items in EconPapers)
JEL-codes: C70 F12 F15 (search for similar items in EconPapers)
Date: 2007-02, Revised 2007-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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