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Symbiotic Production and Optimal Export Policy
Author(s) -
Liang WenJung,
Mai ChaoCheng,
Wang TzuKai
Publication year - 2012
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2012.00601.x
Subject(s) - production (economics) , competition (biology) , economics , product (mathematics) , product market , intermediate good , microeconomics , international economics , industrial organization , international trade , ecology , geometry , mathematics , biology , incentive
This paper constructs a two‐country trade model to examine the optimal policies relating to the export of final and intermediate products under C ournot as well as B ertrand competition when firms engage in symbiotic production internationally. The paper shows that given linear demand for the final product, the optimal export policies are to tax the exports of both the final and intermediate goods under symbiotic production, regardless of whether firms engage in C ournot or B ertrand competition in the final good market, which is contrary to the conventional wisdom.