Strategic trade policy and non-linear subsidy : in the case of price competition

In a strategic trade policy, it is assumed, in this paper, that a government changes disbursement or levy method so that the reaction function of home firm approaches infinitely close to that of foreign firm. In the framework of Bertrand-Nash equilibrium, Eaton and Grossman[1986] showed that export tax is preferable to export subsidy. In this paper, it is shown that export subsidy is preferable to export tax in some cases in the framework of Bertrand-Nash equilibrium, considering the uncertainty in demand. Historically, many economists mentioned non-linear subsidy or tax. However, optimum solution of it has not yet been shown. The optimum solution is shown in this paper.

Altruism, Trade Policy, and the Optimality of Foreign Aid

There are many studies in the literature that deal with the welfare effects of income transfers between nations in a general equilibrium setting. An important impetus for this extensive literature was the demonstration of the transfer paradox; that the donor country could actually gain from a transfer of income to another, and that the recipient could lose as a result of the gift. The reason for this paradoxical result is that the transfer gives rise to a terms-of-trade effect that may be especially beneficial to the donor and detrimental to the recipient. Subsequently, many papers have established conditions under which this paradox will or will not occur. Early work by Samuelson (1954) was followed by demonstrations of paradoxes by Gale (1974), Ohyama (1974), Brecher and Bhagwati (1982) and Bhagwati, Brecher and Hatta 1983, 1985, and Dixit (1983)) among others.1 More recently, many studies have examined whether or not foreign aid — tied and untied — can be welfare improving for both the donor and the recipient (see, for example, Turunen-Red and Woodland (1988), Kemp and Wong (1993), Schweinberger (1990), Hatzipanayotou and Michael (1995), Lahiri and Raimondos-Moller 1995, 1997, Djajić, Lahiri and Raimondos-Møller 1996a, 1996b, and Lahiri, Raimondos-Møller, Wong and Woodland 1997.2

Competition for aid and trade policy

This paper considers the optimal allocation of a given amount of foreign aid between two recipient countries. It is shown that, given consumer preferences, a country following a more restrictive trade policy would receive a smaller share of the aid if the donor country maximises its own welfare in allocating aid. If, on the other hand, the donor country allocates aid in order to maximize the sum of the welfare of the two recipient countries, the result is just the opposite. Finally, we analyze the situation where the recipient countries compete with each other for the given amount of aid. It is shown that this competition tends to lower the level of optimal tariffs in the recipient countries.

O papel dos grupos de interesse no "trade policy making" brasileiro: o caso das negociações Brasil-Argentina para o setor automotivo

Desde a redemocratização do país em 1985 o MRE já vinha se posicionando à favor do diálogo com os mais diversos grupos e entidades sociais. Neste sentido, observou-se ao longo dos últimos anos um aprofundamento da interação com parlamentares, governos estaduais e municipais, empresários, sindicalistas, ONGs e imprensa. A construção de vínculos entre as organizações da sociedade civil críticas das negociações comerciais ao longo da década de 1990 permite falar na criação de um novo campo de ação coletiva transnacional, definido como um espaço de ação política formado por indivíduos e organizações da sociedade civil que participam do processo de elaboração de um conjunto comum de práticas, objetivos e crenças. O que se pode concluir é que diante de um contexto mais competitivo e globalizado, após processo de abertura comercial e intensificação da participação brasileira nas negociações internacionais, a representação dos interesses da classe empresarial teve que se adaptar criando uma nova forma de organização. Desse modo, o presente trabalho visa analisar a crescente interferência de grupos de interesse no processo de tomada de decisão, no que tange aos assuntos de política externa comercial brasileira, tais como as negociações comerciais internacionais por se tratar de um ambiente cujos interesses da classe empresarial mais podem ser afetados. As negociações comerciais internacionais é o ambiente em que a atuação empresarial mais pode ser percebida. As negociações do Mercosul e da ALCA possibilitam observar a participação ativa destes novos atores. Sendo assim, o trabalho apresenta a nova dinâmica de relacionamento entre Estado e grupos da sociedade civil (classe empresarial) para temas ligados a comércio exterior.

Toward a Rational Seafood Trade Policy

With a record trade deficit of almost $146 billion in 1986, and continued high deficits in 1987, there is growing concern about how continued deficits will affect the U. S. economy. Because fishery products had a record $6.3 billion deficit in 1986, the U.S. National Marine Fisheries Service (NMFS) has made the reduction of the fisheries trade deficit one of its top priorities. A recent NMFS trade objective was to "increase exports and domestic consumption of U.S. fishery products" which would lead to a reduction in the trade deficit. In this paper we explore this policy in terms of practicality and desirability.

The Diminishing Returns to Trade Policy in the European Union

The notion that the EU is a trade power is central to studies of the Union’s international presence. Credible threats to withhold access to Europe’s markets are said to provide the Union with leverage in respect of other trade partners. This paper queries the continuing ability of the European Union to act effectively this way. The current Doha malaise is a symptom of deeper changes in the international trade system. As emerging markets become more affluent and participate in foreign direct investment, their interest in market access per se become less important relative to other areas of regulation.

The WTO’s Trade Policy Review Mechanism – An Effective Surveillance Mechanism for Aid for Trade?

There has always been a question mark over how best to integrate developing countries into the world trading system and traditionally the WTO has used special and differential treatment (S&D) to do so. However, since 1996 the WTO has been involved with the Aid for Trade (AfT) initiative typically co-ordinated by the OECD and UN. This article firstly outlines the background to AfT since 1996 under the numerous agencies working in the area, highlighting how importance has always been placed on the monitoring and effectiveness of the process. It then turns to assessing the various methods currently used and the proposal of the WTO’s Trade Policy Review Mechanism (TPRM) as a potential monitoring tool of AfT.

Strategic trade policy and signaling costs with differentiated goods

We consider a trade policy model, where the costs of the home firm are private information but can be signaled through the output levels of the firm to a foreign competitor and a home policymaker. We compute the separating equilibrium and the Bayesian Nash equilibrium, and we compare the subsidies, firms’ expected profits and home government’s welfare in both equilibria, for different values of the own price effect parameter.

Competitiveness and Trade Policy Problems in Agricultural Exports: The Case of Colombia. Doctoral Thesis Project

Este estudio explora el estado actual y el potencial competitivo de las exportaciones agrícolas colombianas a los mercados de Estados Unidos y la Unión Eurpea. Los mercados de estos paises industrializados se constituyen en los más importantes para Colombia, pero al mismo tiempo tienen varias restricciones en el sector agrícola. Este estudio mostrará que la competitividad no es solamente una función de los impedimentos locales o internacionales tales como la pobreza institucional, la baja capacidad tecnológica, la disponibilidad de capital, capital humano y mano de obra, sino también de impedimentos externos como el acceso a los mercados. Por lo tanto, éste es un importante objetivo del presente estudio con el objeto de proyectar posibles escenarios para el comercio colombiano, a fin de investigar la eliminación de estas restricciones. En la parte empírica se enfatizará en los impactos de las restricciones externas en el sentido de un estudio econométrico, sin embargo, la influencia de las restricciones internas será discutida como tal.

Piecemeal Oligopoly, Exchange Rate Uncertainty, and Trade Policy.

Este artículo analiza el efecto sistemático de la volatilidad de la tasa de cambio, cuando un gobierno local debe evaluar políticas comerciales estratégicas lineales y cuadráticas. Este ejercicio se realiza para modelos de mercado Cournot y Bertran. El modelo prueba que tanto el esquema lineal como el cuadrático tienen el mismo efecto sobre el bienestar social de los países, y que la volatilidad de la tasa de cambio domestica lleva a los gobiernos a reducir los subsidios a las exportaciones o bajan los impuestos a las exportaciones, de acuerdo a la variable estratégica elegida por las firmas. La tasa de cambio extranjera tiene diferentes efectos dependiendo de si las firmas producen bajos rendimientos a escalas constantes o decrecientes.