2013 Fiscal Year Final Research Report
The Theory of State Trading Enterprises
| Project/Area Number |
23730253
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| Research Category |
Grant-in-Aid for Young Scientists (B)
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| Allocation Type | Multi-year Fund |
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| Research Field |
Applied economics
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| Research Institution | Chukyo University |
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Principal Investigator |
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| Project Period (FY) |
2011 – 2012
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| Keywords | 国際貿易論 / 国家貿易企業 |
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| Research Abstract |
Some developing countries control imports and domestic procurement by using State Trading Enterprises to assure consumers' benefits. From the classic trade theory, free trade shall be able to accomplish this. Why do some developing countries rescind their STEs to achieve their aims? This study attempts to resolve this paradox.
To do this, I establish a small-open-economy model where an STE controls the imports to maximize consumer surplus, whereas the government controls domestic procurement by setting the producer price to maximize the welfare biased towards the producers' profits. This model setting implies a possibility that the objective of STEs is different from that of the governments. The model showed that when the elasticity of supply is large relative to that of demand in the small importing country, sustaining the STE is the government-objective-superior to free trade and tariff.
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