Peer-Reviewed Journal Details
Mandatory Fields
Dewit, G;Leahy, D
2004
October
Journal of International Economics
Rivalry in uncertain export markets: commitment versus flexibility
Published
6 ()
Optional Fields
R-AND-D OLIGOPOLISTIC INDUSTRIES DEVELOPMENT POLICY STRATEGIC TRADE SUBSIDIES DUOPOLY ROLES
64
195
209
This paper examines optimal trade policy in a two-period oligopoly model, with a home and a foreign firm choosing capital and output. Demand uncertainty, resolved in period two, gives rise to a trade-off between strategic commitment and flexibility in the firms' investment decisions. Finns' investment timing is endogenous and can be manipulated by the home government, which sets a subsidy before firms decide when to invest. We show that when the government wishes to manipulate investment timing, it will choose its policy to deter investment commitment by the home or the foreign firm. (C) 2003 Elsevier B.V. All rights reserved.
AMSTERDAM
0022-1996
10.1016/S0022-1996(03)00082-5
Grant Details