In recent trade policy debates it is often argued that temporary protection stimulates innovation. This paper shows that the validity of the argument depends on the perceived credibility of protection policy. If it is suspected that temporary protection will be removed early should innovation...

We present a new framework to compare the dynamic effect of tariffs, and quotas in the presence of oligopoly. Suppose that the domestic and the foreign firm play a quantity-setting game over time in a perfectly stationary economy. A Markov-perfect equilibrium has the foreign firm exporting at...