Endogenous Timing in Trade Policy Under the Three-Country Model

  • Takao OhkawaEmail author
  • Makoto Okamura
  • Makoto Tawada
Part of the New Frontiers in Regional Science: Asian Perspectives book series (NFRSASIPER, volume 10)


This chapter provides a comprehensive and consistent explanation for the following result: a government with a smaller number of firms becomes a leader and provides a subsidy to home firms, whereas a government with a larger number of firms moves second and imposes a tax on domestic firms in the three-country model. This chapter also presents a comparison of the welfare of each country under free trade and under bilateral intervention, from which we derive policy implications.


Strategic trade policy Endogenous timing Strategic distortion Terms of trade distortion Welfare comparison 



This chapter is a revised version of Ohkawa et al. (2002). We appreciate that Edward Elgar gave me permission to reuse our volume. This work was supported by Grants-in-Aid for Scientific Research (no. 23530303 and 26380340). All remaining errors are ours.


  1. Arvan, L. 1991. Flexibility versus commitment in strategic trade policy under uncertainty. Journal of International Economics 31: 341–335.CrossRefGoogle Scholar
  2. Bliss, C. 1996. Trade and competition control. In Fair trade and harmonization, ed. J. Bhagwati and R.E. Hudec, 313–328. Cambridge: The MIT Press.Google Scholar
  3. Brander, J.A. 1995. Strategic trade policies. In Handbook of international economics, vol. 3, eds. Grossman, G.M. and K. Rogoff, 1395–1455. Amsterdam: Elsevier (North Holland Publisher).Google Scholar
  4. Brander, J.A., and B.J. Spencer. 1985. Export subsidies and international market share rivalry. Journal of International Economics 18: 83–100.CrossRefGoogle Scholar
  5. Collie, D.R. 1994. Endogenous timing in trade policy games: Should governments use countervailing duties? Weltwirtschaftliches Archiv 130: 191–209.CrossRefGoogle Scholar
  6. Cooper, R., and R. Riezman. 1989. Uncertainty and the choice of trade policy in oligopolistic industries. Review of Economic Studies 56: 129–140.CrossRefGoogle Scholar
  7. de Meza, D. 1986. Export subsidies and high productivity: Cause or effect? Canadian Journal of Economics 19: 347–350.CrossRefGoogle Scholar
  8. Dick, A.R. 1993. Strategic trade policy and welfare: The empirical consequences of cross-ownership. Journal of International Economics 35: 227–249.CrossRefGoogle Scholar
  9. Hamilton, J.H., and S.M. Slutsky. 1990. Endogenous timing in duopoly games: Stackelberg or cournot equilibria. Games and Economic Behavior 2: 29–46.CrossRefGoogle Scholar
  10. Hwang, H., and C.T. Schulman. 1993. Strategic non-intervention and the choice of trade policy for international oligopoly. Journal of International Economics 34: 73–93.CrossRefGoogle Scholar
  11. Krishna, K., and M. Thursby. 1991. Optimal policies with strategic distortion. Journal of International Economics 31: 291–308.CrossRefGoogle Scholar
  12. Neary, J.P. 1994. Cost asymmetries in international subsidy games: Should governments help winners or losers. Journal of International Economics 37: 197–218.CrossRefGoogle Scholar
  13. Ohkawa, T., M. Okamura, and M. Tawada. 2002. Endogenous timing and welfare in the game of trade policies under international oligopoly. In Economic theory and international trades: Essays in honor of Murray C. Kemp, ed. A.D. Woodland, 218–231. Cheltenham: Edward ElgarGoogle Scholar
  14. Qiu, L.D. 1994. Optimal strategic trade policy under asymmetric information. Journal of International Economics 36: 333–354.CrossRefGoogle Scholar
  15. Shivakumar, R. 1993. Strategic trade policy: Choosing between export subsidies and export quotas under uncertainty. Journal of International Economics 35: 169–183.CrossRefGoogle Scholar
  16. Syropoulos, C. 1994. Endogenous timing in games of commercial policy. Canadian Journal of Economics 27: 847–864.CrossRefGoogle Scholar
  17. Van Long, N., and A. Soubeyran. 1997. Cost heterogeneity, industry concentration and strategic trade policies. Journal of International Economics 43: 207–220.CrossRefGoogle Scholar

Copyright information

© Springer Japan 2016

Authors and Affiliations

  1. 1.Faculty of EconomicsRitsumeikan UniversityKusatsu 525-8577Japan
  2. 2.Faculty of EconomicsGakushuin UniversityToshima-ku, TokyoJapan
  3. 3.Faculty of EconomicsAichi Gakuin UniversityNagoyaJapan

Personalised recommendations