Export subsidies, cost differential and product quality
Journal
Pacific Economic Review
Journal Volume
15
Journal Issue
1
Pages
32-41
Date Issued
2010
Author(s)
Abstract
This paper presents a vertical product differentiation model to examine the relationship between optimal trade policies and product qualities for different export countries under Cournot quantity competition as well as Bertrand price competition. We can also use this quality model to explain why Japan as a high production-cost country may have incentives to offer high subsidies. This is a case that cannot be explained by the strategic trade theory models à la Brander and Spencer (1985) or Eaton and Grossman (1986).
SDGs
Type
journal article