Abstract
This paper extends the Brander‐Spencer (1985) model by considering market uncertainty, exploring nonlinear policy, and examining firms' choices of strategic variables. By investigating the interrelationship between trade policy and market conduct, we find that unlike the often‐studied linear policy, a nonlinear policy can influence the domestic firm's choice of strategic variables and hence alter the market conduct in favor of the domestic country. Therefore, a nonlinear policy proves strictly superior to a linear one.
Original language | English |
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Pages (from-to) | 75-85 |
Number of pages | 11 |
Journal | Review of International Economics |
Volume | 3 |
Issue number | 1 |
DOIs | |
Publication status | Published - Feb 1995 |
Externally published | Yes |
Funding
This paper is based on Qiu's first essay of his Ph.D. dissertation at the University of British Columbia. Financial support from the Hong Kong Research Grant Council (HKUST DAG93/94.BM13) is gratefully acknowledged.