Choice of Trade Policy with Incomplete Information

Haokai Ning

MPRA Paper from University Library of Munich, Germany

Abstract: This paper studies the design of trade policies in an uncertain third market with incomplete information. Governments in each of the two countries select either direct quantity controls or subsidies in an attempt to shift profits in favour of their own firms in an oligopolistic setting. It is shown that the country with firms having information disadvantage tends to choose the direct quantity control, while the country with well-informed firms would use export subsidy (export quota) when the degree of uncertainty is sufficiently high (low).

Keywords: Uncertainty; incomplete information; Bayesian Nash equilibrium; strategic trade policy; Cournot competition (search for similar items in EconPapers)
JEL-codes: C72 D82 F13 L13 (search for similar items in EconPapers)
Date: 2020-02-01
New Economics Papers: this item is included in nep-gth and nep-int
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Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/113535/9/MPRA_paper_113535.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:101529

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