Optimal strategic trade policy under asymmetric information

Larry D. QIU

doi:10.1016/0022-1996(94)90007-8

Optimal strategic trade policy under asymmetric information

Larry D. QIU

Research output: Journal Publications › Journal Article (refereed) › peer-review

56 Citations (Scopus)

Abstract

When cost is private information in the Brander-Spencer model, the home government is confronted by a decision of choosing between two policy options: a menu of policies and a uniform policy. The former induces separation and so reveals the cost information to the foreign competitors. The latter helps the weak firm by concealing the cost information. The main result from this study is that policy menu is preferred to uniform policy under Cournot competition while the opposite occurs under Bertrand competition.

Original language	English
Pages (from-to)	333-354
Number of pages	22
Journal	Journal of International Economics
Volume	36
Issue number	3-4
DOIs	https://doi.org/10.1016/0022-1996(94)90007-8
Publication status	Published - May 1994
Externally published	Yes

Bibliographical note

I wish to thank Brian Copeland, Guofu Tan, and two anonymous referees for their helpful comments on earlier versions of the paper. In particular, I am very grateful to Barbara Spencer and a referee for their extremely valuable advice and help which have led to great improvements in the quality of the paper. The usual disclaimer applies.

Keywords

Strategic trade policy
Assymmetric information

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10.1016/0022-1996(94)90007-8

Cite this

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title = "Optimal strategic trade policy under asymmetric information",

abstract = "When cost is private information in the Brander-Spencer model, the home government is confronted by a decision of choosing between two policy options: a menu of policies and a uniform policy. The former induces separation and so reveals the cost information to the foreign competitors. The latter helps the weak firm by concealing the cost information. The main result from this study is that policy menu is preferred to uniform policy under Cournot competition while the opposite occurs under Bertrand competition.",

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note = "I wish to thank Brian Copeland, Guofu Tan, and two anonymous referees for their helpful comments on earlier versions of the paper. In particular, I am very grateful to Barbara Spencer and a referee for their extremely valuable advice and help which have led to great improvements in the quality of the paper. The usual disclaimer applies.",

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PY - 1994/5

Y1 - 1994/5

N2 - When cost is private information in the Brander-Spencer model, the home government is confronted by a decision of choosing between two policy options: a menu of policies and a uniform policy. The former induces separation and so reveals the cost information to the foreign competitors. The latter helps the weak firm by concealing the cost information. The main result from this study is that policy menu is preferred to uniform policy under Cournot competition while the opposite occurs under Bertrand competition.

AB - When cost is private information in the Brander-Spencer model, the home government is confronted by a decision of choosing between two policy options: a menu of policies and a uniform policy. The former induces separation and so reveals the cost information to the foreign competitors. The latter helps the weak firm by concealing the cost information. The main result from this study is that policy menu is preferred to uniform policy under Cournot competition while the opposite occurs under Bertrand competition.

KW - Strategic trade policy

KW - Assymmetric information

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JO - Journal of International Economics

JF - Journal of International Economics

IS - 3-4

ER -

Optimal strategic trade policy under asymmetric information

Abstract

Bibliographical note

Keywords

Access to Document

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