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| Author: | Balboa, O.I. Daughety, A.F. Reinganum, J.F. |
| Title: | Market structure and the demand for free trade |
| Journal: | Journal of Economics & Management Strategy
2004 : SPRING, VOL. 13:1, p. 125-150 |
| Index terms: | Free trade Market structure Trade policy Duopoly Models |
| Language: | eng |
| Abstract: | This study examines a heterogenous goods duopoly model, wherein governments simultaneously and non-cooperatively (hereafter as: non-coop.)choose whether or not to provide subsidies for their firms and then firms non-coop. choose output levels, either sequentially or simultaneously. It is found that government trade policy and market structure are interdependent. First, the trade regime alters traditional firm preferences over sequential vs. simultaneous play. Second, different market structures influence governments' preferences about free trade versus subsidies. Further, if one of the firms is a potential leader, allowing for endogenous market structure generates equilibrium outcomes that sometimes reinforce, and sometimes counter, traditional results in the strategic trade literature. |
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