International competition in vertically differentiated markets with innovation and imitation: trade policy versus free trade

0439524 - NHU-C 2015 RIV GB eng J - Článek v odborném periodiku
Kováč, E. - Žigić, Krešimir
International competition in vertically differentiated markets with innovation and imitation: trade policy versus free trade.
Economica. Roč. 81, č. 323 (2014), s. 491-521. ISSN 0013-0427. E-ISSN 1468-0335
Institucionální podpora: PRVOUK-P23
Klíčová slova: model of price competition * trade policy * free trade
Kód oboru RIV: AH - Ekonomie
Impakt faktor: 1.045, rok: 2014

The competition between firms from developed (DC) and less developed countries (LDC) is typically in vertically differentiated products. We consider a model of price competition between DC and LDC firms with quality choice and imitation, and study the effects of ex post tariffs. The government faces a choice between commitment to free trade and imposing a tariff. Tariffs can lead to change in the rank of qualities compared to free trade. We identify conditions under which this quality reversal takes place, and show that quality reversal is necessary for trade policy to be superior to free trade in welfare terms.
Trvalý link: http://hdl.handle.net/11104/0244170