Strategic trade policy and signaling costs with differentiated goods |
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| Authors: | Fernanda A. Ferreira Humberto A. Moreira Alberto A. Pinto |
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| Affiliation: | 1. ESEIG – Instituto Politécnico do Porto, Rua D. Sancho I, 981, 4480-876 Vila do Conde, Portugal;2. Fundaç &∼ao Getúlio Vargas – RJ, Instituto Brasileiro de Economia, Praia de Botafogo, 190, Rio de Janeiro, Brasil;3. Departamento de Matemática, Universidade do Minho, 4710-057 Braga, Portugal |
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| Abstract: | We consider a trade policy model, where the costs of the home firm are private information but can be signaled through the output levels of the firm to a foreign competitor and a home policymaker. We compute the separating equilibrium and the Bayesian Nash equilibrium, and we compare the subsidies, firms' expected profits and home government's welfare in both equilibria, for different values of the own price effect parameter. (© 2008 WILEY-VCH Verlag GmbH & Co. KGaA, Weinheim) |
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