Export Subsidies and Countervailing Duties Under Asymmetric Information

Piracha, Matloob E (2004) Export Subsidies and Countervailing Duties Under Asymmetric Information. Discussion paper. University of Kent, Kent (The full text of this publication is not available from this repository)

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Abstract

This paper explores the role of information in the formulation of trade policy for home and foreign country, in a setting in which the home government chooses its subsidy level first after which the foreign firm retaliates by imposing tariffs on its imports. We consider an environment in which home firm costs are private information but it can signal these costs to both policymakers and the foreign firm by choosing the appropriate output level. We show that a low-cost home firm has an incentive to misrepresent itself as high-cost. This is understood by the foreign firm and both policymakers and results in the home government setting a higher subsidy in the signalling case compared to the case when the home firm's output was not a signal of its costs; the foreign government sets the same tariff in both cases.

Item Type: Monograph (Discussion paper)
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Matloob Piracha
Date Deposited: 07 Oct 2008 11:17
Last Modified: 14 Jan 2010 14:44
Resource URI: http://kar.kent.ac.uk/id/eprint/11319 (The current URI for this page, for reference purposes)
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