We show that social welfare in the setup where the government lacks the full ability to commit to its trade policies may exceed the social welfare when the government possesses full commitment power if consumer surplus is part of the social welfare function. This is never the case in the...

type="main" xml:id="ecca12093-abs-0001" <p>The competition between firms from developed (DC) and less developed countries (LDC) is typically in vertically differentiated products. We consider a model of price competition between DC and LDC firms with quality choice and imitation, and study the...</p>

We analyse the following policy dilemma: strategic trade policy versus free trade when the domestic government is bound to intervene only after the domestic firm's strategic variable in the form of R&D investment is chosen, and when the information can be either symmetric or asymmetric. The...

The authors analyse a simple ‘tariffs cum foreign competition’ policy targeted at enhancing the competitive position of a domestic, developing country firm that competes with its developed country counterpart on the domestic market and that carries out an innovative (or imitative)...

We build a dynamic oligopoly model in which a particular firm (leader) invests in process innovations facing subsequent endogenous (or free) entry by other firms (followers). All firms that enter the market incur positive entry costs. We identify conditions under which it is optimal for the...

The annual CERGE-EI economic survey of the Czech Republic provides an overview of the country's recent economic and political developments, as well as its major institutions, business environment, taxes, and other public policies. It also contains a host of data on the Czech Republic and other...

We introduce spillover e¤ect into John Sutton's (1991,1998) concept of endogenous sunk costs. These sunk costs appear in the form of R&D investment into quality in our framework. We show that with spillovers increasing and the effectiveness of investment in raising quality decreas- ing, the...