International trade policy towards monopoly and oligopoly

Article


Kujal, P. and Ruiz, J. 2009. International trade policy towards monopoly and oligopoly. Review of International Economics. 17 (3), pp. 461-475. https://doi.org/10.1111/j.1467-9396.2009.00812.x
TypeArticle
TitleInternational trade policy towards monopoly and oligopoly
AuthorsKujal, P. and Ruiz, J.
Abstract

This paper highlights the importance of product differentiation and endogenous R&D in determining the optimal R&D policy, in a model where investment in cost-reducing R&D is committed before firms compete in a differentiated-goods third-country export market. R&D is always taxed in oligopolies for high degrees of product differentiation. For lower degrees of product differentiation the duopoly is subsidized or the government remains inactive. In contrast, the monopoly is always subsidized. The government with a duopoly may be active or inactive depending on the degree of product differentiation. Thus, we may observe a reversal in the sign of the optimal R&D policy if the degree of product differentiation changes or, alternatively, if there is a change in the number of firms. Similar qualitative results hold if trade policy uses output subsidies, instead of R&D promotion.

JournalReview of International Economics
ISSN0965-7576
Publication process dates
Deposited19 Sep 2013
Output statusPublished
Digital Object Identifier (DOI)https://doi.org/10.1111/j.1467-9396.2009.00812.x
LanguageEnglish
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