ECON 981 - International Trade Theory and Policy
Spring 1999
Professor: Y. M. Chang
Office: Waters Hall 319
Phone: 532-4573
E-mail: ymchang@ksu.ksu.edu
Objectives: This course is intended to familiarize students with
the fundamentals of
international trade and recent literature in trade theory and policy
under imperfect competition.
Class discussions will be focused on the following topics: (i) the
causes of international trade
in imperfectly competitive international markets, (ii) strategic trade
policies such as export
subsidies, tariffs, voluntary import expansions, and voluntary export
restraints, (iii) issues
related to dumping and antidumping, (iv) international trade and environmental
economics,
(v) political economy of trade protectionism, (vi) the welfare effects
of trade liberalization,
(vii) and other issues.
Prerequisite: ECON 735
Tentative Course Outline:
Students are expected
to read the articles with asterisks. Some supplemental papers are
provided for each topic. Students may read unassigned papers
at their discretion.
(1) Intra-industry Trade and Oligopoly
*Brander J. A., ��Intra-industry
Trade in Identical Commodities,�� Journal of
International
Economics 14 (1981), 1-14.
*Brander, J. A. and P. R.
Krugman, ��A 'Reciprocal Dumping' Model of International
Trade,�� Journal
of International Economics 15 (1983), 313-323. (Included
in Gene M.
Grossman, ed.,
Imperfect
Competition and International Trade, The MIT Press,
Cambridge, Massachusetts,
1992.)
*Hwang, H., ��Intra-industry
Trade and Oligopoly,�� Canadian Journal of Economics 7
(1984), 126-137.
Venables, A.
J., ��Trade and Trade Policy with Imperfect Competition: The Case of
Identical Products
and Free Entry,�� Journal of International Economics 19 (1985),
1- 20.
(2) Strategic Trade Policy
*Brander, J. A. and B. J.
Spencer, ��Export Subsidies and International Market Share
Rivalry,�� Journal
of International Economics 18 (1985), 83-100.
*Eaton, J. and G. M. Grossman,
��Optimal Trade and Industrial Policy under
Oligopoly,��
Quarterly
Journal of Economics 101 (1986), 383-406. (Included in Gene
M. Grossman,
ed., Imperfect Competition and International Trade, The MIT Press,
Cambridge, Massachusetts,
1992.
*To, T., ��Export Subsidies
and Oligopoly with Switching Costs,�� Journal of
International
Economics 37 (1994), 97-110.
*Brander, J. A. and B. J.
Spencer, ��Tariff Protection and Imperfect Competition,�� in
Monopolistic
Competition and International Trade, ed. by H. Kierzkowski, Oxford
University Press,
1984. (Included in Gene M. Grossman, ed., Imperfect Competition
and International
Trade, The MIT Press, Cambridge, Massachusetts, 1992.
*Brander, J. A. and B. J.
Spencer, ��Trade Warfare: Tariffs and Cartels,�� Journal of
International
Economics 16 (1984), 227-242.
*Bjorksten, N., ��Voluntary
Import Expansions and Voluntary Export Restraints in an
Oligopoly Model
with Capacity Constraints,�� Canadian Journal of Economics 27
(1994), 46-457.
Dixit, A. K.
and G. M. Grossman, ��Targeted Export Promotion with Several
Oligopolistic
Industries,�� Journal of International Economics 21 (1986), 233-249.
Carmichael, C.
M., ��The Control of Export Credit Subsidies and Its Welfare
Consequences,��
Journal
of International Economics 23 (1987), 1-19.
Ito, M. and K.
Kiyono, ��Welfare-enhancing Export Subsidies,�� Journal of Political
Economy
95 (1987), 115-137.
Spencer, B. J.,
��Capital Subsidies and Countervailing Duties in Oligopolistic
Industries,��
Journal
of International Economics 25 (1988), 45-69.
Tanaka, Y., ��Tariffs
and Welfare of an Exporting Country in a Free Entry Oligopoly
under Integrated Markets,��
Oxford
Economic Papers 44 (1992), 317-321.
*Dixit, A. K., ��International
Trade Policy for Oligopolistic Industries,�� Economic
Journal
94 (1984 supplement), 1-16.
Krishna, K.,
��Trade Restrictions as Facilitating Practices,�� Journal of International
Economics
26 (1989), 251-270.
Greaney, T. M.,
��Import Now! An Analysis of Market-Share Voluntary Import
Expansions (VIEs),��
Journal
of International Economics 40 (1996), 149-163.
(3) Issues Related to Dumping and Antidumping
*Stiglitz, J. E., ��Dumping
on Free Trade: The U.S. Import Trade Laws,�� Southern
Economic
Journal 64 (1997), pp. 402-424.
*Dixit, A., ��Anti-dumping
and Countervailing Duties under Oligopoly,�� European
Economic
Review 32 (1985), 55-68.
*Bernhofen, D. M., ��Price
Dumping in Intermediate Good Markets,�� Journal of
International
Economics 39 (1995).
*Anderson, J. E., ��Domino
Dumping I: Competitive Exporters,�� American Economic
Review
82 (1992), 65-83.
Anderson, J.
E., ��Domino Dumping II: Anti-dumping,�� Journal of International
Economics
35 (1993), 133-150.
Reitzes, J. D.,
��Antidumping Policy,�� International Economic Review 34 (1993),
745- 763.
(4) Strategic Trade Policy under Uncertainty
*Cooper, R. and R. Riezman,
��Uncertainty and the Choice of Trade Policy in
Oligopolistic
Industries,�� Review of Economic and Studies 56 (1989), 129-140.
Arvan, L., ��Flexibility
versus Commitment in Strategic Trade Policy under
Uncertainty,�� Journal
of International Economics 31 (1991), 341-355.
*Shivakumar, R., ��Strategic
Trade Policy: Choosing Between Export Subsidies and
Export Quotas
under Uncertainty,�� Journal of International Economics 35 (1993),
168- 183.
(5) International Trade under Monopolistic Competition
*Krugman, P., ��Increasing
Returns, Monopolistic Competition, and International
Trade,�� Journal
of International Economics 9 (1979), 469-480.
*Krugman, P., ��Scale Economies,
Product Differentiation, and the Pattern of Trade,��
American
Economic Review 70 (1980), 950-959.
*Dixit, A. K. and V. Norman,
��Product Differentiation and Intraindustry Trade,�� in
Theory of
International Trade, Cambridge University Press, 1980. (Included in
Gene
M. Grossman,
ed., Imperfect Competition and International Trade, The MIT Press,
Cambridge, Massachusetts,
1992.)
Lancaster, K.,
��Intra-industry Trade under Perfect Monopolistic Competition,�� Journal
of International
Economics 10 (1980), 151-176.
Helpman, E.,
��International Trade in the Presence of Product Differentiation,
Economies of
Scale, and Monopolistic Competition,�� Journal of International
Economics
11 (1981), 305-340.
Venables, A.
J., ��Optimal Tariffs for Trade in Monopolistically Competitive
Commodities,��
Journal
of International Economics 12 (1982), 225-242.
Francois, J.
F., ��Optimal Commercial Policy with International Returns to Scale,��
Canadian
Journal of Economics 25 (1992), 184-195.
Anderson, F.
J., ��Trade, Firm Size, and Product Variety under Monopolistic
Competition,��
Canadian
Journal of Economics 24 (1991), 12-20.
(6) International Trade and Environmental Economics
*Whalley, J., ��The Interface
Between Environmental and Trade Policies,�� Economic
Journal
101 (1991), 180-189.
*Barrett, S., ��Strategic
Environmental Policy and International Trade,�� Journal of Public
Economics
54 (1994), 325-358.
*Rauscher, M., ��On Ecological
Dumping,�� Oxford Economic Papers 46 (1994),
822-840.
*Ludema, R. D. and I. Wooton,
��Cross-border Externalities and Trade Liberalization:
The Strategic
Control of Pollution, Canadian Journal of Economics 27 (1994), 950-966.
*Kennedy, P. W., ��Equilibrium
Pollution Taxes in Open Economics with Imperfect
Competition,��
Journal
of Environmental Economics and Management 27 (1994), 49-63.
Hung, N. M., ��Taxing
Pollution in an International Duopoly Context,�� Economics
Letter 44 (1994),
339-343.
(7) Political Economy of Trade Protectionism
*Moore, M. O. and S. M. Suranovic,
��Lobbying and Cournot-Nash Competition:
Implication
for Strategic Trade Policy,�� Journal of International Economics
35 (1993),
367-376.
*Moore, M. O. and S. M. Suranovic,
��Lobbying vs. Administered Protection,�� Journal of
International
Economics 32 (1992), 289-303.
*Hillman, A. L., ��Protection,
Politics, and Market Structure,�� in Elhanan Helpman and
Assaf Razin,
ed., International Trade and Trade Policy, The MIT Press, Cambridge,
Massachusetts,
1991.
*Maggi G. and A. Rodriguez-Clare,
��The Value of Trade Agreements in the Presence of
Political Pressures,��
Journal
of Political Economy 106 (1998), 574-601.
Hillman, A. and H.
Urspring, ��Domestic Politics, Foreign Interests and International
Trade Policy,�� American
Economic Review 51 (1988), 59-79.
Hofer, T. and C. Woodruff,
��Domestic Politics, Foreign Interests, and International
Trade Policy: Comment,��
American
Economic Review 84 (1994), 1474-1475.
Hillman, A. and H.
Urspring, ��Domestic Politics, Foreign Interests and International
Trade Policy: Reply,��
American
Economic Review 84 (1994), 1476-1478.
Cassing, J. and A.
Hillman, ��Political Influence Motives and The Choice between
Tariffs and Quotas,��
Journal
of International Economics 19 (1985), 279-300.
(8) Issues Related to Trade Liberalization, Economic Integration, and Others
*Buffie, E. F. and P. T.
Spiller, ��Trade Liberalization in Oligopolistic Industries,��
Journal of
International Economics 20 (1986), 65-82.
*Eldor, R. and D. Levin,
��Trade Liberalization and Domestic Monopoly: A Welfare
Analysis,��
International
Economic Review 31 (1990), 773-782.
*Krugman, P., ��Is Bilateralism
Bad?��, in Elhanan Helpman and Assaf Razin, ed.,
International
Trade and Trade Policy, The MIT Press, Cambridge, Massachusetts,
1991, pp. 9-23.
Frankel, J. A., E.
Stein, and S. J. Wei, ��Regional Trading Agreements: Natural or
Supernatural?�� American
Economic Review 86 (1996), 52-56.
Perroni, C. and J.
Whalley, ��How Severe Is Global Retaliation Risk under Increasing
Regionalism?�� American
Economic Review 86 (1996), 57-61.
*Bhagwati, J. and A. Panagariya,
��The Theory of Preferential Trade Agreements:
Historical Evolution
and Current Trends,�� American Economic Review 86 (1996),
82- 87.
Sampson, G. P., ��Compatibility
of Regional and Multilateral Trading Arrangements:
Reforming the WTO
Process,�� American Economic Review 86 (1996), 88-92.
Brander, J. A. and
B. J. Spencer, ��Foreign Direct Investment with Unemployment and
Endogenous Taxes and
Tariffs,�� Journal of International Economics 22 (1987), 257- 279.
Saggi, K., ��Entry
into a Foreign Market: Foreign Direct Investment versus
Licensing,�� Review
of International Economics 4 (1996), 99-104.
Spencer, B. J. and
J. A. Brander, ��International R & D Rivalry and Industrial
Strategy,�� Review
of Economic Studies 50 (1983), 702-722.
Aoki, R. and
T. J. Prusa, ��International Standards for Intellectual Property Protection
and R &
D Incentives,�� Journal of International Economics 35 (1993), 251-273.
Relationship of the Course to Other International Economics Courses
This course does
not cover the same ground as, but is complementary to, International
Trade (Econ
681), International Economics (Econ 823), and International Markets and
Agricultural
Trade (Agec 840).
Exams and Grading:
An important
part of this course is class presentation and a term paper. Each
student
is fully
responsible for leading a class discussion once during the semester on
one of the
topics
listed in the course outline.
Grades
will be based upon a mid-term exam, class presentation and term paper,
and a
final
exam. The weights for grading are as follows:
Mid-term Exam
30%
Class Presentation and Term Paper
35%
Final Exam
35%
There
will be no make?up exams and no extra credit work available.
Plagiarism and cheating:
The administration requires that each syllabus include the following statement
regarding KSU's policy on plagiarism and cheating:
"Plagiarism and cheating are serious offenses and may be punished by failure
on the
exam, paper or project; failure in the course; and/or expulsion from the
university.
For more information refer to the 'Academic Dishonesty' policy in Inside
KSU."
Updated: 9/12/23