Contingent trade policy and economic efficiency

McCalman P, Staehler F, Willmann G (2019)
REVIEW OF WORLD ECONOMICS 155(2): 227-255.

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Zeitschriftenaufsatz | Veröffentlicht | Englisch
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Abstract / Bemerkung
This paper models the competition for a domestic market between one domestic and one foreign firm as a pricing game under incomplete cost information. As the foreign firm incurs a trade cost to serve the domestic market, it prices more aggressively, giving rise to the possibility of an inefficient allocation. In spite of asymmetric information, we can devise a contingent trade policy to correct this potential market failure. National governments, however, make excessive use of such a policy due to rent shifting motives, thus creating another inefficiency. The expected inefficiency of national policy is found to be comparatively larger (lower) at low (high) trade costs. Hence contingent trade policy conducted by national governments is preferred only when trade costs are high.
Erscheinungsjahr
Zeitschriftentitel
REVIEW OF WORLD ECONOMICS
Band
155
Ausgabe
2
Seite(n)
227-255
ISSN
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McCalman P, Staehler F, Willmann G. Contingent trade policy and economic efficiency. REVIEW OF WORLD ECONOMICS. 2019;155(2):227-255.
McCalman, P., Staehler, F., & Willmann, G. (2019). Contingent trade policy and economic efficiency. REVIEW OF WORLD ECONOMICS, 155(2), 227-255. doi:10.1007/s10290-019-00343-4
McCalman, P., Staehler, F., and Willmann, G. (2019). Contingent trade policy and economic efficiency. REVIEW OF WORLD ECONOMICS 155, 227-255.
McCalman, P., Staehler, F., & Willmann, G., 2019. Contingent trade policy and economic efficiency. REVIEW OF WORLD ECONOMICS, 155(2), p 227-255.
P. McCalman, F. Staehler, and G. Willmann, “Contingent trade policy and economic efficiency”, REVIEW OF WORLD ECONOMICS, vol. 155, 2019, pp. 227-255.
McCalman, P., Staehler, F., Willmann, G.: Contingent trade policy and economic efficiency. REVIEW OF WORLD ECONOMICS. 155, 227-255 (2019).
McCalman, Phillip, Staehler, Frank, and Willmann, Gerald. “Contingent trade policy and economic efficiency”. REVIEW OF WORLD ECONOMICS 155.2 (2019): 227-255.