This paper shows that optimal trade policies for vertically related markets depend crucially on production technology. By employing a production function with variable-coefficient technology, it shows that return to scale is crucial in determining the direction of government intervention. Therefore, the assumption of fixed-coefficient production technologies, which has been popular in industrial organization and trade literature when modeling vertically related markets, should be used with caution.
机构:
Nagoya City Univ, Grad Sch Econ, Mizuho Ku, 1 Yamanohata,Mizuho Cho, Nagoya, Aichi 4678501, JapanNagoya City Univ, Grad Sch Econ, Mizuho Ku, 1 Yamanohata,Mizuho Cho, Nagoya, Aichi 4678501, Japan
机构:
Nagoya City Univ, Grad Sch Econ, Mizuho Ku, 1 Yamanohata,Mizuho Cho, Nagoya, Aichi 4678501, JapanNagoya City Univ, Grad Sch Econ, Mizuho Ku, 1 Yamanohata,Mizuho Cho, Nagoya, Aichi 4678501, Japan