We consider strategic trade policy when a high-cost and a low-cost firm belonging to two different countries compete in quantities in a third country, and technology is transferable via licensing. We characterize the effects of subsidies on (i) licensing payments-a new source of rents, (ii) the...

This paper reconsiders strategic trade policy when a high-cost and a low-cost firm belonging to different countries compete a la Cournot in a third country market and technology is transferable. Assuming technology is transferred via licensing, optimal trade policy is characterized. Apart from...