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Learning by Doing, Precommitment and Infant-Industry Promotion.

Abstract:

The authors examine the implications for strategic trade policy of different assumptions about precommitment in a two-period Cournot oligopoly game with learning by doing. The inability of firms and governments to precommit to future actions encourages strategic behavior which justifies an optimal first-period export tax relative to the profit-shifting benchmark of an export subsidy. In the linear case, the optimal subsidy is increasing in the rate of learning with government precommitment bu...

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Journal:
Review of Economic Studies
Volume:
66
Issue:
2
Publication date:
1999-01-01
URN:
uuid:755a6b67-6f23-438d-80aa-e46637db2cfd
Local pid:
oai:economics.ouls.ox.ac.uk:11388
Language:
English

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