In a three-country model, this paper investigates linkages between merger incentives of exporting firms and the trade policy of an importing country. When exporting firms come from only one country, the tariff response of the importing country <i>reverses</i> the welfare effects of a merger in the...

This paper investigates how customs union members select the common external tariff (CET) to levy on imports from nonmembers. A perfectly competitive, pure exchange, general-equilibrium model of world trade is simulated. Contrary to most previous work, countries have the freedom to share...

The primary purpose of the paper is to provide characterizations of the conditions for welfare improvements in several situations that have received very little attention in the existing literature. The first aim is to exhibit the gains that can accrue to a country from the elimination of excess...

Customs unions constitute agreements to engage in free intra-union trade and to levy common external tariffs on trade with nonmembers. Existing theoretical models do not agree on how the common external tariffs are chosen. In this paper, a model of customs union formation is developed in which...

The paper analyzes environmental tax policy reform using a competitive model of world trade that includes production-generated environmental damage (pollution) and trade tariffs. The authors examine the feasibility of Pareto-improving multilateral reforms of environmental taxes, and show that...

We compare foreign direct investment (FDI) and technology licensing as two modes of entry into a foreign market. While direct entry via FDI dissipates rents in the host country, opportunistic competition from a license may erode rents in the entrant's other markets. Since FDI increases...

In a two-period duopoly model, this paper considers a foreign firm's choice between licensing and FDI and studies the relative impact of these modes of technology transfer on the incentives for innovation of that firm and its domestic rival. Relative to licensing, FDI limits technology...