Strategic Behavior of Firms and Trade and Industrial Policies

1996 Fiscal Year Final Research Report Summary

• Project/Area Number: 07630052
• Research Category: Grant-in-Aid for Scientific Research (C)
• Allocation Type: Single-year Grants
• Section: 一般
• Research Field: 経済政策(含経済事情)
• Research Institution: Waseda University
• Principal Investigator: KIYONO Kazuharu School of Political Science & Economis, Waseda University, Full Professor, 政治経済学部, 教授 (00183038)
• Project Period (FY): 1995 – 1996
• Keywords: Strategic behavior / Cartels / Trade and industrial policies / VIE (Voluntaryu Import Expansion) / Commitment / Bahgwati's targeting principle / Non-economic objectives / mixed-strategies

Research Abstract

There are three pieces of papers whcih are completed by the present research project. In the first paper entitle "Strategic Effects of Domestic anbd Export Cartels : Their Static and Dynamic Analysis", we have found that allowing the competitive industry to form domestic or export cartels in a delberate fashion may lowser the national welfare in the static sense compared with the competitive equilibrium when the export demand is relatively more price-elastic than the domestic demand. But the industry's dynamic incentive to undertake the costreducing R&D investment tends to become excessive from the viewpoint of the natonal welfare,
In the second paper entitled "Non-Economic Objectives and Bhagwati's Targeting Principle in International Oligopoly, " we studied whether the so-called Bhagwati's targetig principle carries over to international cournot duopoly when the home country's government seeks for some non-economic objective. The most important finding is that his principle can be gen eralized to oligopoly setting, but the second second-best optimal tax plicy subject to a non-economic objective generally requires import tariff as well as the pecuniary instruments directly affecting the target variable with more weights on the latter.
In the last paper entitlte "Voluntary Import Expansion and Government Commitments", we have explored into the effects of voluntary import expnasion (VIE) in international oligopoly a la Bertrand. The major finding is that when the government cannor precommit to either domestic sales taxs or import subsidies as VIE means, then there arises the foreign firm's strategic incentive to affect the equilibirum. More specifically, when the government chooses the domestic sales taxs contingent on the firms's pricing decisions so as to achieve the target import volume, then the foreign firm chooses a mixed strategy in pricing, and the resulting equilibirium is just like the VER equilibirum. On the other hand, when the government chooses import subsidies, there exists no equilibirum.