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Time consistency, learning by doing and infant-industry protection: the linear case

Abstract:
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.
Publication status:
Published
Peer review status:
Peer reviewed
Version:
Publisher's version

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Authors


Dermot Leahy More by this author
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Institution:
University of Oxford
Research group:
Industrial Economics
Oxford college:
Merton College
Department:
Social Sciences Division - Economics
Publisher:
Economic & Social Research Institute Publisher's website
Journal:
Economic and Social Review Journal website
Volume:
26
Issue:
1
Pages:
59-68
Publication date:
1994
ISSN:
0012-9984
URN:
uuid:cf3a0c01-e241-4141-b72d-f65e6c089bf9
Local pid:
oai:economics.ouls.ox.ac.uk:10463
Language:
English
Keywords:

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