Free trade vs. strategic trade | Free trade versus strategic trade
1997
Grossman, Gene M. | Maggi, Giovanni
We investigate whether a welfare-maximizing government ought to pursue a program of" strategic trade intervention or instead commit itself to free trade when domestic firms will have an opportunity to manipulate the government's choice of the level of" intervention. Domestic firms may overinvest in physical and knowledge capital in a regime of" strategic intervention in order to influence the government's choice of subsidy. In the event commitment to free trade may be desirable even in settings where profit-shifting would be" possible. We analyze the desirability of such a commitment when the government is well" informed about firms' types and actions, and when it suffers from an informational disadvantage."
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Publisher National Bureau of Economic Research | Cambridge, MA : National Bureau of Economic Research, ©1997
This bibliographic record has been provided by National Agricultural Library