Optimal Export Policy with Upstream Price Competition
In: The Manchester School, Band 88, Heft 2, S. 324-348
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In: The Manchester School, Band 88, Heft 2, S. 324-348
SSRN
In: The Manchester School, Band 88, Heft 2, S. 324-348
ISSN: 1467-9957
We present a third‐market model with a vertical trading structure, in which upstream input suppliers engage in homogeneous price competition. We show that, under downstream Bertrand competition, a non‐monotonic export policy may result. Specifically, the optimal policy of the exporting country can turn into a tax–subsidy–tax as the degree of product substitutability rises. We also confirm the conventional result for which the optimal policy is an export subsidy (tax) if there is Cournot (Bertrand) competition downstream, provided that the number of domestic suppliers is at an intermediate level. We further discuss bilateral policy interventions when both exporting countries offer a subsidy/tax to their domestic downstream firms. We show that a non‐monotonic export policy (tax–subsidy–tax) can arise even in this extended setting.
We investigate how port privatization affects port charges, firm profits, and welfare. Our model consists of an international duopoly with two ports and two markets. When the unit transport cost is large, privatization of ports decreases the prices for port usage, although neither government has an incentive to privatize its port. The equilibrium governmental decisions are inconsistent with the desirable outcome if the unit transport cost is not large enough. The smaller country's government is more likely to privatize its port, although the larger country's government is more likely to nationalize its port to protect its domestic market.
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In: ISER Discussion Paper No. 864
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Working paper
In: Journal of economics, Band 140, Heft 3, S. 209-231
ISSN: 1617-7134