Voluntary Import Expansion and Government Commitments

概要

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The present paper disucsses the effects of VIE in relation to the measures to ensure a target import volume. When the government can precomit to either domestic sales taxes or import subsidies before the firms' pricing decisions, the reaction curve of only the firm directly given such pecuniary incentives is affected. But when the government can undertake those policy measures as VIE only after observing or contingent on the firm's pricing decisions, the foreign firm has a strategic incentive to affect the equilibirum. When such contingent policy is in the form of domestic sales taxes the resulting equilibirum yields mixed strategy in the foreign firm's pricing, while in the case of contingent import subsidies then no equilibrium is likely to exist.
早稲田大学の論文