- This paper examines the implications for strategic trade policy of different assumptions about precommitment in a dynamic oligopoly game with learning by doing. Assuming that demands are linear, we find that the optimal first-period subsidy is increasing in the rate of learning with precommitment but decreasing in it if the government cannot precommit to future subsidies. The infant-industry argument is thus reversed in the absence of precommitment.
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- Peer reviewed
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- Economic and Social Review
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- This article has been made available under Creative Commons Attribution-NonCommercial-ShareAlike 1.0 Generic (CC BY-NC-SA 1.0) licence.
Time consistency, learning by doing and infant-industry protection: the linear case
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