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Export Subsidies and Countervailing Duties Under Asymmetric Information

Piracha, Matloob (2010) Export Subsidies and Countervailing Duties Under Asymmetric Information. Trade and Development Review, . (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:11319)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided.

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: Article
Subjects: H Social Sciences
H Social Sciences > H Social Sciences (General)
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
Depositing User: Matloob Piracha
Date Deposited: 07 Oct 2008 11:17 UTC
Last Modified: 16 Nov 2021 09:49 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/11319 (The current URI for this page, for reference purposes)

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