Export enhancing tariff protection with strategic precommitment

Dermot Leahy

No 199401, Working Papers from School of Economics, University College Dublin

Abstract: The import protection as export promotion thesis is examined from a positive and normative perspective in a series of two-stage games in which firms choose R&D and capacity in the first stage and quantity or price in the second. It is shown (i) that a tariff affects exports in two ways; firstly, with increasing marginal cost it crowds out exports; secondly by increasing R&D and/or capacity it raises exports indirectly, (ii) when firms choose R&D and quantities a small tariff will raise welfare. This result can be reversed under Bertrand competition.

Keywords: Protection; Export promotion; R&D; Oligopoly; Precommitment; Commercial policy--Mathematical models; Oligopolies; Exports--Mathematical models (search for similar items in EconPapers)
JEL-codes: F12 L13 (search for similar items in EconPapers)
Date: 1994-03
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http://hdl.handle.net/10197/1950 First version, 1994 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:ucn:wpaper:199401

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