Review of Economic Studies Vol. 58 No. 1 1991

Vertical Foreclosure and International Trade Policy

Barbara J. Spencer^1,2,3,4; Ronald W. Jones^3,4

¹ National Bureau of Economic Research · ² University of British Columbia · ³ University of Rochester · ⁴ Columbia University

Abstract

International differences in the cost of production of a key intermediate product can mean that a domestic firm is dependent on supplies from a foreign vertically integrated firm. This paper considers the incentives for the foreign firm and foreign country to supply the domestic firm when the firms compete in a Cournot or Bertrand market for the final product. The vertical supply decision is significantly affected by domestic supply conditions for the input and a domestic tariff on final product imports. Optimal policy by the exporting country may require a tax on both exports, or a subsidy on both exports.

DOI

10.2307/2298052

Volume

58

Issue

1

Pages

153

Sources

bibtex:phds-export.bib openalex crossref

Cite

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