Optimal Trade Policy, Foreign Ownership and Corporate Control

Yen-Ju Lin
2013 Procedia Economics and Finance  
This paper constructs a two-country, three-firm trade model with a two-stage game to explore the unilateral optimal export policy under Cournot competition, when the domestic export firm undertakes Cross-border ownership. We find that the optimal export policy is subsidy when domestic multinational does not has control of a local firm through partial ownership. However, the optimal export policy of the domestic country is to levy a tax when domestic multinational has control of a local firm.
more » ... eover, the optimal export policy is free trade if there is no foreign ownership regulation possessed by foreign country.
doi:10.1016/s2212-5671(13)00057-9 fatcat:3voe5iw3p5aaja5ktyghk3dqwm