Passive unilateral cross-ownership and strategic trade policy

Artikel

In a Cournot duopoly model in which exporters compete in a third market, this paper revisits the classical issue (dating back to the pioneering work of Brander and Spencer, Export Share and International Market Share Rivalry, 1985) of the strategic trade policy choice in the presence of the passive participation of one firm in the rival. Passive cross-ownership dramatically alters the participating and participated firms' governments' choice to apply the strategic trade policy instrument, the equilibria typology and their efficiency properties. In fact, if the share of cross-ownership is sufficiently large, the participated firm's government finds optimal to tax export. Moreover, beyond an adequately high threshold, cross-ownership modifies the equilibrium from the activist regime for both countries to an asymmetric regime in which only the participating firm's government intervenes. In addition, in the case of the traditional common activist regime equilibrium, the classical prisoner's dilemma game structure may disappear.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Economics: The Open-Access, Open-Assessment E-Journal ; ISSN: 1864-6042 ; Volume: 10 ; Year: 2016 ; Issue: 2016-10 ; Pages: 1-22 ; Kiel: Kiel Institute for the World Economy (IfW)

Classification and Topics

• Classification: Wirtschaft ; Trade and Labor Market Interactions
• Subject: Export subsidy ; Prisoner's dilemma ; Unilateral cross-ownership ; Cournot duopoly

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fanti, Luciano ; Buccella, Domenico
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2016

Further information

• DOI: doi:10.5018/economics-ejournal.ja.2016-10
• Handle: http://hdl.handle.net/10419/140656
• Last update: 10.03.2025, 11:43 AM CET