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Strategic Trade Policy and Network Compatibility
Authors:Tsuyoshi Toshimitsu
Institution:1.School of Economics,Kwansei Gakuin University,Nishinomiya,Japan
Abstract:We consider strategic trade policy for information and communication technology (ICT) product markets with international rivalry. Usually, ICT products exhibit network externalities and product compatibility (i.e., network compatibility). We demonstrate that the optimal strategic trade policy depends on the degree of network compatibility of ICT products. Furthermore, using an endogenous decision game for strategic variables (i.e., quantity and price), we consider the relationship between the optimal strategic trade policies and the endogenous mode of competition.
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