Open AccessDOMINANT STRATEGIC TRADE POLICY
Author(s) -
Valentin Melnik
Publication year - 2021
Publication title -
vide. tehnoloģija. resursi/environment. technology. resources
Language(s) - English
Resource type - Journals
eISSN - 2256-070X
pISSN - 1691-5402
DOI - 10.17770/etr2021vol2.6542
Subject(s) - cournot competition , subsidy , tariff , duopoly , commercial policy , license , economics , international economics , unit (ring theory) , government (linguistics) , international trade , microeconomics , business , market economy , computer science , linguistics , philosophy , mathematics education , mathematics , operating system
In implementing trade policy measures, governments usually select from a range of instruments including quotas, subsidies (explicit or implicit) and tariffs. In this paper we consider the potential gain of a government pursuing a two-part trade policy: an import license for entry, along with a per-unit tariff on imports. The model is a three-step game between home and foreign countries in the Cournot duopoly. The paper demonstrates that two-part trade policy is dominant.