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Does a 'non-committed' government always generate lower social welfare than its 'committed' counterpart? Strategic trade policy when consumer surplus matters
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SYSNO ASEP 0368801 Document Type J - Journal Article R&D Document Type Journal Article Subsidiary J Článek ve WOS Title Does a 'non-committed' government always generate lower social welfare than its 'committed' counterpart? Strategic trade policy when consumer surplus matters Author(s) Žigić, Krešimir (NHU-N) RID Source Title Journal of Comparative Economics. - : Elsevier - ISSN 0147-5967
Roč. 39, č. 4 (2011), s. 533-556Number of pages 24 s. Language eng - English Country US - United States Keywords government commitment ; social welfare ; optimal tariffs and export subsidies Subject RIV AH - Economics R&D Projects LC542 GA MŠMT - Ministry of Education, Youth and Sports (MEYS) CEZ AV0Z70850503 - NHU-N (2005-2011) UT WOS 000299064700006 DOI 10.1016/j.jce.2011.03.006 Annotation We show that social welfare in the setup where the government lacks the full ability to commit to its trade policies may exceed the social welfare when the government possesses full commitment power if consumer surplus is part of the social welfare function. This is never the case in the standard, "third market" framework of strategic trade policy. We provide two examples in which consumer surplus matters: the "home market" and the "intraindustry trade" setup. The policy instruments under consideration are import tariffs and export subsidies and there are R&D spillovers from the domestic to the foreign firm. Workplace Economics Institute Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2012
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