ABSTRACT
This dissertation constructs three strategic trade models. The first model is a single-shot two-stage game model of intra-industry trade with trade retaliation against government provided export subsidies and lobbying by foreign firm on domestic government¡¦s import tariff. The second model is an infinite repeated game model of intra-industry where the history of government and firm interaction is the basis for constructing trade strategies. The third model is a single-shot three-stage game model of intra-industry trade with the linkage between domestic and foreign intermediate-input and final-good industries and the choice of optimal export subsidies in the two industries for two governments.
Chapter 1 introduces the motivation, objectives, framework, and literature review of this dissertation. The literature review is organized as follows. Initially we review the foundations of the basic intra-industry trade model, where our model is rooted. Next we present the more significant papers that describe the sensitivity of the basic model, because our repeated game model will show yet another way that the basic model is sensitive. Next we present some dynamic game theoretic results, which we use to construct our repeated game model. Finally, we review some papers related to intermediate input and strategic trade.
The first model is developed in Chapter 2. We discover that there are two perfect strategy subgame perfect equilibria in this model. And then an import tariff is available, and using that tariff will remove the benefits originally conferred by an export subsidy. Active trade policy is not eliminated by the two governments and tariff policy is larger than subsidy policy. Hence, an import tariff will more than offset the anticipated gains from a subsidy policy. There is no reason to believe that one equilibrium is better or more likely than another, because the highest payoffs equilibrium of the two governments and domestic firm is not the best payoff equilibrium of the foreign firm.
We used the single-shot game model of Chapter 2 and molded it into a repeated game in Chapter 3. First, we found the set of Nash equilibria toward solving the repeated game model. Second, we only focused on the subgame perfect equilibria from the infinite Nash equilibria¡¦s set. We used the result in Fudenberg and Maskin (1986) to define the subgame perfect equilibria. Third, we showed that in the repeated game a subgame perfect strategy of free trade can increase all players¡¦ payoffs which are better than the single-shot game equilibrium payoffs.
Chapter 4 develops the third model. We observe how domestic and foreign governments choose their optimum export subsidy policies for their intermediate input and final good production by using the linkage between domestic and foreign intermediate-input and final-good industries under the condition of vertical specialization. The result indicates that under the condition of vertical specialization, the two governments will choose positive export subsidies for their final goods while they will give no subsidies for their intermediate inputs.
Chapter 5 presented the implications of vertical specialization on the cross-strait economy and trade. To maintain the competitive advantage of Taiwan economy and smoothly upgrade industry structure, transferring the labor-intensive industry and the labor-intensive production sections to China seems an optimum choice under the principle of comparative advantages. Nevertheless, for Taiwan, the upgrade of local industries has never stopped, but with the acceleration of industrial relocation, the transformation of production and trade structures are also taking place. The impact carried by this transformation is extensive and profound. In addition to obvious impact on the economic perspective, if the structure of employment market cannot react in time, a great social cost may be incurred. How to utilize the edge of industrial specialization between the Strait to strengthen Taiwanese industries¡¦ competitive, enhance product development ability through cooperation with multinational enterprises, dominate product development, and establish a center of task division for regional industries can be one of the main focuses in the development of Taiwan¡¦s industrial policy.
| Identifer | oai:union.ndltd.org:NSYSU/oai:NSYSU:etd-0708107-173929 |
| Date | 08 July 2007 |
| Creators | Yang, I-hsun |
| Contributors | Jiin-ming Fahn, Cheng-chen Yang, Tri-gin Liu, Shih-shen Chen, Diana HweiAn Tsai |
| Publisher | NSYSU |
| Source Sets | NSYSU Electronic Thesis and Dissertation Archive |
| Language | English |
| Detected Language | English |
| Type | text |
| Format | application/pdf |
| Source | http://etd.lib.nsysu.edu.tw/ETD-db/ETD-search/view_etd?URN=etd-0708107-173929 |
| Rights | restricted, Copyright information available at source archive |
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