Choice of Strategic Industry-protecting Policies Amidst Uncertainty in Demand and Supply

• 발행기관: 한국무역연구원
• 저자명: Yang-Seung Lee
• 간행물 정보: 『무역연구』제13권 제4호, 107~117쪽, 전체 11쪽
• 주제분류: 경제경영 > 무역학
• 파일형태: PDF
• 발행일자: 2017.08.30

영문 초록

It has been shown how trade policy can be strategically chosen while demand uncertainty significantly arises for the exporting market. As an extension, we will show how industryprotecting policy can be strategically chosen while uncertainty arises in both demand and supply. In summary, demand uncertainty is important to determine trade policy while supply uncertainty important to industry-protecting policy. Some countries enact an industry-protecting policy of either subsidy or price control despite arguments about inefficiency. This paper aims to explore which policy can be strategically chosen. To do so, we will use a multi-stage game model. One finding is that subsidy is clearly better when supply uncertainty is significant. This is largely because subsidy induces domestic firms to internalize the supply uncertainty. When demand uncertainty is significant, the number of firms and the elasticity, of demand and supply, should be taken into account when making a choice. This paper contributes to the body of knowledge in terms of industrial policy and strategic choice.

목차

Ⅰ. Introduction

Ⅱ. Equilibrium and Uncertainty

Ⅲ. Price Control

Ⅳ. Subsidy

Ⅴ. Comparison and Conclusion

키워드

Industrial Protection Price Control Strategic Choice Subsidy Welfare