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Title: |
Intra-industry Trade and Strategic Trade
Policy in the Presence of Public Firms |
| Author: |
Pal, Debashis;
White, Mark D. |
| Author
Affiliation: |
U Cincinnati;
College of Staten Island |
| Source: |
International Economic Journal, Winter 2003, v. 17, no. 4, pp. 29-41 |
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Publication Date: |
Winter 2003 |
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Abstract: |
The literature
on intra-industry trade and strategic trade policy has always considered
only profit-maximizing private firms being active in international
trade. This paper incorporates state-owned public firms in the context
of intra-industry trade. The existence of welfare-maximizing public
firms significantly affects intra-industry trade and strategic trade
policy. Compared to when both firms are private, the existence of public
firms lowers optimal tariffs and subsidies, but also lowers the total
volume of trade between the two countries. The lower volume of trade,
however, does not translate into lower levels of welfare for the trading
countries. |
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