Role for trade policy? markets with informational barriers to entry

When barriers to entry are created by an informational asymmetry between firms and consumers about the quality of a product, there may be a role for trade policy, in general, and for infant industry protection, in particular. This paper extends the recent literature investigating the role of trade p...

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Bibliographic Details
Published in:The International trade journal 1995-07, Vol.9 (2), p.247-271
Main Author: Skeath, Susan
Format: Article
Language:English
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Summary:When barriers to entry are created by an informational asymmetry between firms and consumers about the quality of a product, there may be a role for trade policy, in general, and for infant industry protection, in particular. This paper extends the recent literature investigating the role of trade policy in improving national welfare in models with informational barriers to entry. Results from a new variant of the existing models show that export subsidies are not the optimal policy response to market failures associated with experience goods. Further analysis shows that the role for trade policy in the literature as a whole depends on the types of market failures that arise in each model.
ISSN:0885-3908
1521-0545
DOI:10.1080/08853909508523828