Rent Shifting and Rent Sharing: A Re-Examination of the Strategic Industrial Policy Problem

Rent Shifting and Rent Sharing: A Re-Examination of the Strategic Industrial Policy Problem

This paper re-examines the market structure problem in the strategic trade policy literature. It is shown that rent sharing between the home union and the home firms raises total home industry rents regardless of whether the international duopoly is Cournot or Bertrand. Furthermore, home welfare als...

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Bibliographic Details
Published in:The Canadian journal of economics 1995-05, Vol.28 (2), p.450-462
Main Author: Fung, K. C.
Format: Article
Language:eng
Subjects:
Domestic consumption
Economic models
Economic rent
Financial market structures
Home economics
Industrial market
Industrial policy
Industrial unions
Labor demand
Labor unions
Oligopolies
Oligopoly
Rent (Economic theory)
Rents
Studies
Trade policy
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Summary:This paper re-examines the market structure problem in the strategic trade policy literature. It is shown that rent sharing between the home union and the home firms raises total home industry rents regardless of whether the international duopoly is Cournot or Bertrand. Furthermore, home welfare also rises with cooperation if the international industry consists of more than two firms, if the industry is faced with entry, and if there is domestic consumption. This paper shows that rent sharing can be a robust `strategic industrial policy' and can be interpreted as a `solution' to the market structure dilemma. /// Déplacement de la rente et partage de la rente: réexamen du problème de la politique de stratégie industrielle. Ce mémoire réexamine la question de la structure de marché dans la littérature sur la politique commerciale stratégique. On montre que la partage de la rente entre les syndicats et les firmes d'un pays tend à augmenter le niveau de la rente totale de l'industrie nationale, que le duopole international soit du type Cournot ou Bertrand. De plus le niveau de bien-être national s'accroît quand il y a coopération si l'industrie internationale a plus que deux firmes, si l'industrie doit faire face à l'entrée possible de nouvelles firmes, et s'il y a consommation domestique du produit. Ce mémoire montre que le partage de la rente peut constituer une politique de stratégie industrielle robuste et peut être interprété comme une `solution' au dilemme posé par la structure du marché.
ISSN:0008-4085
1540-5982