Contents of the volume

2020, Volume 73 - Issue 2

ISSN: 2499-8265
RSS feed citation: at RePEc
Publication date: 06 May 2020

THE PERSISTING US TRADE DEFICIT. IS PROTECTIONISM THE RIGHT ANSWER?

Riccardo Fiorentini

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GLOBALISATION AND ECONOMIC GROWTH: A PANEL DATA APPROACH

Cândida Ferreira

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TRADE RELATION BETWEEN INDIA AND OTHER BRICS COUNTRIES: A MULTIDIMENSIONAL APPROACH USING GRAVITY MODEL AND GRANGER CAUSALITY

Narayanasamy Kubendran

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STRATEGIC TRADE POLICY WITH ASYMMETRIC BARGAINING AGENDA

Luciano Fanti, Domenico Buccella

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TRADE LINKAGES AND BUSINESS CYCLE CO-MOVEMENT: ANALYSIS OF TRADE BETWEEN AFRICAN ECONOMIES AND THEIR MAIN TRADE PARTNERS

Lumengo Bonga-Bonga, Emilie Kinfack

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TECHNICAL EFFICIENCY AND ECONOMIC GROWTH IN THE SADC REGION

Mduduzi Biyase, Mokgadi Maleka, Abelwe Maluleka, Talent Zwane

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Genoa Chamber of Commerce
Economia Internazionale / International Economics

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Corresponding author

Luciano FANTI, Department of Economics and Management, University of Pisa, Italy

Co-authors

Domenico BUCCELLA, Department of Economics, Kozminski University, Warsaw, Poland

Strategic Trade Policy with Asymmetric Bargaining Agenda

Pages

257-274

Abstract

This paper challenges the conventional wisdom of the strategic trade policy – in which governments set subsidies for their own exporter firms – under unionisation by considering the realistic difference in the labour market institutions between producing countries, i.e. asymmetric bargaining agenda (Efficient Bargaining, EB, and Right-to Manage, RTM) in rival firms. We show that 1) the government whose firm is EB (resp. RTM) always finds convenient to set an export tax (resp. an export subsidy), regardless of whether the other government intervenes; 2) an asymmetric equilibrium emerges in which only one government intervenes; 3) under appropriate side-payments, governments would find beneficial to coordinate either over mutual intervention or free trade, with the latter ensuring higher welfare levels; 4) the asymmetric equilibrium is preferred by the RTM country because its national social welfare under intervention is always higher than under free trade. These results show that active trade policies in the RTM country partially solve the classical Prisoner’s Dilemma of the trade policy game.

JEL classification

F16, J51, L13

Keywords

Export Subsidy/Tax, Efficient Bargaining, Right-to-Manage, Cournot Duopoly, Asymmetric Equilibrium

Index

  1. Introduction
  2. Model set up
  3. The strategic game played by national governments
  4. Main results
  5. Conclusions

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