Essays on trade and industrial policy
Abstract
This work contains two separate essays. The first essay, "International Patent Length Setting with Shelving Behavior" looks at government choices in patent lengths when invention of a basic technology is distinguished from invention of applications of that technology. The choice of patent length in each country is shown to depend on relative ability at "applied" vs. "basic" R&D. A country which is relatively superior at "applied" R&D will choose a shorter patent length than a country which is relatively superior at "basic" R&D. If one country can impose its own choice of patent length on another country, it will choose a length that closely resembles its own. When both countries choose to have a finite length patent, but are different in their relative abilities in K&D, a single global patent length will lie between those of the two countries. The second essay, "Equilibrium Dumping with Endogenous Anti-dumping Penalties," looks at anti-dumping law and its effects. In this paper, price discrimination is the basis for a margin of dumping. We use a Cournot duopoly model where profits are dependent on past and future margin of dumping. The model is used to investigate the observed phenomenon of a continuation of intercountry price differences in the face of uncertain anti-dumping penalties. A foreign firm is subject to an anti-dumping fine, where the probability of incurring the fine and the size of the fine are determined by the previous period's margin of dumping. In a non-cooperative infinitely repeated game the Markov Perfect Equilibrium can lead to a continuing margin of dumping. Anti-dumping laws that force price equalization, under these conditions are shown to be equivalent to an exclusion of the foreign firm from the market.
Degree
Ph.D.
Advisors
Thursby, Purdue University.
Subject Area
Economic theory|Economics
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