The existence of firms with different levels of efficiency within a country plays an important role in this in-depth analysis of industrial and trade policies in a multi-country trade-theoretic framework. Sajal Lahiri and Yoshiyasu Ono examine various industrial policies, R&D subsidies and trade policies under conditions of imperfect competition in a product market created by the presence of Cournot oligopolistic interdependence in production. Trade is defined broadly to include trade in commodity as well as trade in capital, specifically foreign direct investment. While the first part of the book focuses on commodity trade and assumes full employment, the latter considers foreign direct investment and assumes the presence of unemployment. Given the importance of industrial policies and the prevalence of imperfect competition, together with ongoing attention to theoretical issues concerning industrial economics, this research will excite interest amongst researchers, advanced students and policy makers in this field.

A theoretical analysis of international trade and industrial policy, developing and using new models of trade with imperfect competition. Modeling of imperfect competition within international trade has been difficult until recent breakthroughs in this area, which have provided a more realistic view of the world economy. The book builds on the advances provided by such tools as game theory and the theory of monopolistic competition. The first section covers broad and basic trade issues which arise under imperfect competition. Section two examines implications for trade policy covering issues such as strategic trade policy in static and dynamic settings. Section three deals with various structural issues, such as optimal choice of trade liberalizing policies, the formation of trade blocks, and open dualistic economy with externalities.

This book presents a representative collection of papers on international trade, one of the most dynamic sub-fields in economics. The contributions range over all the major areas of research, including articles on the geographical aspects of international trade by Paul Krugman and Alan Deardorff, on dynamic stochastic economies by Avinash Dixit, and on endogenous growth by Gene Grossman and Elhanan Helpman. In addition to the theoretical contributions, the book also contains work on important policy issues such as auction quotas, discussed by Kala Krishna, and the role of government in economic development, by Anne Krueger. Also included is an assessment by Bill Ethier of the theoretical achievements of a leading authority in international trade theory, Ronald Jones, in whose honour the essays were written.

Since the 1980s, economists have used the concept of strategic trade policy, which takes account of imperfect competition and increasing returns in the international marketplace, to criticize conventional views about free trade. According to the new view, a government can take strategic steps to raise its income at another country's expense—by subsidizing exports or erecting trade barriers, protecting certain firms from foreign competition, or promoting the development of new industries. This volume looks at the experience of specific industries in order to determine the effectiveness of strategic trade policy in promoting economic growth. The nine papers cover the U.S. and European auto industries, the U.S. steel industry, the commercial aircraft industry, airline deregulation in Scandinavia, and labor and industrial policy in Korea and Taiwan. The authors refine the basic techniques for measuring policy effectiveness, extend them to encompass industry dynamics, and test the implications of new trade models. International economists and trade experts in government and business will find important new insights into the role of strategic trade policy in international competitiveness.

Highlights what national governments should know to properly conduct their industrial policies under the multilateral trading system.

International trade is the core foundation of globalisation. This current and up-to-date volume brings together the finest academics working in the field today, containing contributions in key areas of policy research, such as, modelling frameworks, trade policy, trade and migration, trade and the environment, trade and unemployment.

Interest in U.S. trade policy has been stimulated in recent years by the massive American trade deficit, by the belief that intervention by foreign governments in international markets has given other countries a competitive edge over the United States, and by concern about the increase in protectionism among industrial countries. In turn, major analytical developments in international economics have revolutionized trade theory, broadening its scope both by introducing in a more formal manner such concepts as imperfect competition, increasing returns, product differentiation, and learning effects and by including the study of political and economic factors that shape trade policy decisions. This collection of papers—the result of a conference held by the NBER—applies these "new" trade theories to existing world cases and also presents complementary empirical studies that are grounded in more traditional trade theories. The volume is divided into four parts. The papers in part 1 consider the problem of imperfect competition, empirically assessing the economic effect of various trade policies introduced in industries in which the "new" trade theory seems to apply. Those in part 2 isolate the effects of protection from the influences of the many economic changes that accompany actual periods of protection and also examine how the effects from exogenous changes in economic conditions vary with the form of protection. Part 3 provides new empirical evidence on the effect of foreign production by a country's firms on the home country's exports. Finally, in part 4, two key bilateral issues are analyzed: recent U.S.-Japanese trade tensions and the incident involving the threat of the imposition of countervailing duties by the United States on Canadian softwood lumber.