English, Article, Journal or magazine article edition: The Welfare Effects of Imperfect Harmonization of Trade and Industrial Policy Gatsios, Konstantine; Karp, Larry

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Bookmark: http://trove.nla.gov.au/version/148992
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The Welfare Effects of Imperfect Harmonization of Trade and Industrial Policy
Author
  • Gatsios, Konstantine
  • Karp, Larry
Physical Description
  • preprint
Notes
  • Partial cooperation in setting trade policy may be worse than no cooperation for countries who form a customs union. The paper investigates three situations where this is likely to occur. First, if the countries forming the union comprise too small a percentage of the non-competitive sector of the industry, their cooperation may be disadvantageous for essentially the same reason that a merger may be disadvantageous in oligopolistic industries. Second, even if the countries forming the union comprise the entire non-competitive sector of industry, cooperation on trade policy may be disadvantageous if industrial policy (e.g., investment subsidies) is chosen noncooperatively. Third, cooperation in choosing trade policies may encourage excessive investment by competitive importers and thus reduce the demand faced by the oligopolists.
  • Customs Union; Industrial Policy; Oligopoly; Trade Policy
  • RePEc:cpr:ceprdp:335
  • Partial cooperation in setting trade policy may be worse than no cooperation for countries who form a customs union. The paper investigates three situations where this is likely to occur. First, if the countries forming the union comprise too small a percentage of the non-competitive sector of the industry, their cooperation may be disadvantageous for essentially the same reason that a merger may be disadvantageous in oligopolistic industries. Second, even if the countries forming the union comprise the entire non-competitive sector of industry, cooperation on trade policy may be disadvantageous if industrial policy (e.g. investment subsidies) are chosen non-cooperatively. The reason is that cooperation in trade policy may exacerbate the inefficiencies created by non-cooperation at an earlier stage. Third, cooperation in choosing trade policies may encourage excessive investment by competitive importers and thus reduce the demand faced by the oligopolists.
  • Trade and industrial policy, imperfect competition, customs union, International Relations/​Trade,
  • RePEc:ags:iatrwp:51256
Language
  • English
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