ON THE CONSISTENT CONJECTURES EQUILIBRIUM OF EXPORT SUBSIDY GAME

This paper explores an export subsidy game in an international duopoly in which governments of countries as well as firms hold conjectures about the response of other governments. In the framework with linear demand/quadratic cost functions, a homogeneous good and no home consumption, I shall obtain the relations among the conjectural variation of firms, that of governments, and the optimal subsidies for countries. And I shall show that if and only if firms hold the consistent conjectures, Nash type behavior (zero conjectural variation) of governments is consistent.     

MARKET REACTIONS TO THE PASSAGE OF THE FINANCIAL HOLDING COMPANY ACT IN TAIWAN

Abstract. We examine how financial institutions react to various events surrounding the passage of Taiwan's Financial Holding Company Act in June 2001. Empirical results indicate that the financial system experiences significant abnormal returns along the legislative process. Smaller firms have significantly higher abnormal returns, thus lending no support for the hypothesis that larger firms benefit more from the Act. Further analysis shows that the significance of market value is replaced by a significant securities industry effect, thereby consistent with the observation that Taiwan's securities firms are generally smaller in market values and are potential target firms for financial holding companies.