Abstract
Strategic delegation analysis has been limited to sales delegation cases, until Jansen et al. (International Journal of Industrial Organization 25:531–539, 2007) presented the case of market share delegation. In international trade theory, export rivalry and import protection have always attracted considerable attention. This paper assesses the influence upon optimal trade policy of introducing market share delegation in a trade duopoly context. It shows that delegation matters, and different forms of delegation coupled with asymmetric costs will imply different degrees of government intervention.
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Notes
Given that w i is always non-negative, the other group of solution to this problem can be abandoned. Therefore, the equilibrium is unique.
We appreciate the referee providing us with the explanation as to why our natural log transformation is closer to standard Cournot than the sales delegation.
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Wang, L.F.S., Wang, YC. & Zhao, L. Market Share Delegation and Strategic Trade Policy. J Ind Compet Trade 9, 49–56 (2009). https://doi.org/10.1007/s10842-007-0027-5
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DOI: https://doi.org/10.1007/s10842-007-0027-5