Publication: Incompletely informed policymakers and trade policy in oligopolistic industries
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Co-Authors
Caglayan, M
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Embargo Status
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Abstract
We study strategic trade policy design when governments are incompletely informed about the market demand. Two symmetric, homogeneous product Cournot firms, one in each country, compete in a third country market. Contrary to what common sense would suggest, we show that if governments are less informed on the stochastic market demand both countries will be better off. Also contrary to findings in the literature, we show that when the government is partially informed, although quantity controls would be optimal for both high and low levels of demand uncertainty, subsidies are preferred for intermediate levels.
Source
Publisher
Blackwell Publ Ltd
Subject
Economics
Citation
Has Part
Source
Manchester School
Book Series Title
Edition
DOI
10.1111/j.1467-9957.2004.00393.x