Strategic export policy, monopoly carrier, and product differentiation

Takauchi, Kazuhiro (2015): Strategic export policy, monopoly carrier, and product differentiation.

Abstract

This paper examines strategic subsidy/tax policy in a third-country market model with a monopoly carrier. To transport its product to the third market, each exporting firm must use the carrier. We show that under Cournot duopoly, the optimal policy is an export tax if the degree of product differentiation is large enough. In a Bertrand duopoly, the optimal policy is always the export tax. We also show that the subsidized firm's exports in the Cournot duopoly are larger than those in the Bertrand duopoly if the degree of product differentiation is small enough.

• Item Type: MPRA Paper
• Language: English
• Keywords: Export subsidy/tax; Monopoly carrier; Product differentiation
• Subjects: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations

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