Strategic trade and delegated competition

Nolan H. Miller, Amit Pazgal

Research output: Contribution to journalArticlepeer-review


Strategic trade theory has been criticized on the grounds that its predictions are overly sensitive to modeling assumptions. Applying recent results in duopoly theory, this paper considers three-stage games in which governments choose subsidies, firms' owners choose incentive schemes for their managers, and then the managers compete in the product market. We show that if firms' owners have sufficient control over their managers' behavior, then the optimal strategic trade policy does not depend on the mode of product-market competition, i.e., whether firms compete by setting prices or quantities.

Original languageEnglish (US)
Pages (from-to)215-231
Number of pages17
JournalJournal of International Economics
Issue number1
StatePublished - May 2005
Externally publishedYes


  • Delegation games
  • Strategic international trade

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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