[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/beo/journl/v67y2022i234p55-80.html
   My bibliography  Save this article

Product Differentiation And Export Incentive Schemes: A Game Theory Approach

Author

Listed:
  • Beatriz Pereira
  • Sílvia Ferreira Jorge
  • Celeste Amorim Varum
  • Micaela Pinho
Abstract
In order to improve economic growth, many governments use public policies to promote their countries’ degree of internationalisation. When designing optimal public incentive schemes for internationalisation it is fundamental to consider the characteristics of export markets, such as size, competition degree, tax system, and product differentiation. This paper analyses whether product differentiation has any impact on optimal internationalisation incentive policies, focusing on export subsidy schemes. We develop a two-stage game for three different scenarios: (1) no subsidy, (2) a fixed-subsidy scheme, and (3) a subsidyper-quantity-exported scheme. Using numerical analysis, we revisit the analysis of schemes designing optimal public incentives for internationalisation and conclude that for export markets with low product differentiation a subsidy-per-quantity exported scheme is best at stimulating internationalisation, while for export markets with high product differentiation a fixed-subsidy scheme is the preferable policy.

Suggested Citation

  • Beatriz Pereira & Sílvia Ferreira Jorge & Celeste Amorim Varum & Micaela Pinho, 2022. "Product Differentiation And Export Incentive Schemes: A Game Theory Approach," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 67(234), pages 55-80, July – Se.
    • Handle: RePEc:beo:journl:v:67:y:2022:i:234:p:55-80
    as

    Download full text from publisher

    File URL: http://www.ekof.bg.ac.rs/wp-content/uploads/2015/12/234-03.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dixit, Avinash K. & Grossman, Gene M., 1986. "Targeted export promotion with several oligopolistic industries," Journal of International Economics, Elsevier, vol. 21(3-4), pages 233-249, November.
    2. Chiara Criscuolo & Ralf Martin & Henry G. Overman & John Van Reenen, 2019. "Some Causal Effects of an Industrial Policy," American Economic Review, American Economic Association, vol. 109(1), pages 48-85, January.
    3. Hong Hwang & Chao-Cheng Mai & Ya-Po Yang, 2015. "Specific vs Ad Valorem Strategic Export Subsidies with Taxation Distortion," Review of Development Economics, Wiley Blackwell, vol. 19(4), pages 820-828, November.
    4. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
    5. Bannò, Mariasole & Sgobbi, Francesca, 2010. "Firm participation in financial incentive programmes: The case of subsidies for outward internationalisation," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 792-803, November.
    6. Dobre I. Claudia, 2008. "Implication of game theory to international trade," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(10), pages 132-137, April.
    7. Rajiv D. Banker & Inder Khosla & Kingshuk K. Sinha, 1998. "Quality and Competition," Management Science, INFORMS, vol. 44(9), pages 1179-1192, September.
    8. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Glass, Amy Jocelyn & Saggi, Kamal, 1999. "FDI policies under shared factor markets," Journal of International Economics, Elsevier, vol. 49(2), pages 309-332, December.
    2. Barbara J. Spencer & Ronald W. Jones, 1991. "Vertical Foreclosure and International Trade Policy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 153-170.
    3. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics.
    4. J. Peter Neary, 2009. "Putting the “New” into New Trade Theory: Paul Krugman's Nobel Memorial Prize in Economics," Scandinavian Journal of Economics, Wiley Blackwell, vol. 111(2), pages 217-250, June.
    5. Kazuharu Kiyono & Jota Ishikawa, 2013. "Reexamination of Strategic Public Policies," The Japanese Economic Review, Japanese Economic Association, vol. 64(2), pages 201-231, June.
    6. Neary, J Peter & Leahy, Dermot, 2000. "Strategic Trade and Industrial Policy towards Dynamic Oligopolies," Economic Journal, Royal Economic Society, vol. 110(463), pages 484-508, April.
    7. Kazuharu Kiyono & Fang Wei, 2008. "The role of location choice in strategic export promotion policy: capital liberalization incentives of exporting countries," Journal of Economics, Springer, vol. 95(1), pages 55-74, October.
    8. Walsh, Patrick, 1991. "A general framework for analysing endogenous trade divergences," LSE Research Online Documents on Economics 6780, London School of Economics and Political Science, LSE Library.
    9. Colacicco, Rudy, 2024. "Strategic trade policy in general oligopolistic equilibrium: The case of import tariffs," Research in Economics, Elsevier, vol. 78(2).
    10. Krugman, Paul R., 1989. "Industrial organization and international trade," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 20, pages 1179-1223, Elsevier.
    11. Baldwin, Robert E, 1992. "Are Economists' Traditional Trade Policy Views Still Valid?," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 804-829, June.
    12. Kuo-Feng Kao & Cheng-Hau Peng, 2017. "Trade liberalization, forward-looking firms, and welfare," Review of International Economics, Wiley Blackwell, vol. 25(5), pages 999-1016, November.
    13. Mccorriston, Steve & Sheldon, Ian, 1989. "Imperfect Competition, Trade Policy and Processed Agricultural Products," Occasional Papers 232831, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    14. Dermot Leahy & J. Peter Neary, 2013. "Oligopoly and Trade," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 7, pages 197-235, Palgrave Macmillan.
    15. John Gilbert & Onur A. Koska & Reza Oladi, 2022. "International trade, differentiated goods, and strategic asymmetry," Southern Economic Journal, John Wiley & Sons, vol. 88(3), pages 1178-1198, January.
    16. Chi‐Chur Chao & Mong Shan Ee & Xuan Nguyen & Eden S. H. Yu, 2022. "Minimum wage, firm dynamics, and wage inequality: Theory and evidence​," International Journal of Economic Theory, The International Society for Economic Theory, vol. 18(3), pages 247-271, September.
    17. Kaz Miyagiwa & Yuka Ohno, 2009. "Multinationals, Tax Holidays, And Technology Transfer," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 82-96, March.
    18. McCorriston, Steve & Sheldon, Ian M., 1992. "International Competitiveness: Implications of New International Economics," Occasional Papers 243178, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    19. Brainard, S. Lael & Martimort, David, 1997. "Strategic trade policy with incompletely informed policymakers," Journal of International Economics, Elsevier, vol. 42(1-2), pages 33-65, February.
    20. Gangopadhyay Partha & Elkanj Nasser, 2009. "Politics of Defence Spending and Endogenous Inequality," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 15(1), pages 27-49, May.

    More about this item

    Keywords

    export subsidy schemes; internationalisation; product differentiation; game theory.;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F19 - International Economics - - Trade - - - Other
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:beo:journl:v:67:y:2022:i:234:p:55-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Goran Petrić (email available below). General contact details of provider: https://edirc.repec.org/data/efbeoyu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.