Essays on strategic trade policies, differentiated products, and exhaustible resources

This thesis consists of three essays. The firsts essay looks at the optimal export policy in the context of an vertically related industry with differentiated products, and analyze effects of the degree of product substitutability and market structure on the determination of such policy. It is shown that results obtained in a similar model with homogenous goods rivalry no longer hold when the goods are differentiated. Indeed, the degree of product substitutability plays an important role in the determination of export policies, it also determine whether a country can be better off under a trade policy war compared to free trade. The use of differentiated product setting also allows one to compare export policies and countries' welfare between Cournot and Bertrand competitions. It is found that the results of the comparison are also sensitive to the degree of product substitutability.;The third essay analyzes the dynamic rivalry by two firms in the cultural goods market. Consumers are assumed to have homogeneous valuation of one good and heterogeneous valuation of the other good. One of the firm can choose the quality of its product from a continuum of quality levels. This firm is the far-sighted firm in the dynamic model. Consumer preferences evolve gradually over time. This evolution is driven by a network effect and a depreciation effect. The network effect is a function of the current market shares of the two firms. We consider the case where one firm is the dynamic optimizer and the other firm is myopic. The far-sighted firm solves its problem by manipulating its current market share, which in turn affects the evolution of consumer preferences. We show there exist two steady states, one of which is a stable in the saddle-point sense, while the other is unstable. Our comparative static analysis of the stable steady state shows that the steady state quality level of the far-sighted firm is increasing in the discount factor and decreasing in the cost and the speed of adjustment parameters. Moreover, the steady state quality level is lower than the equilibrium quality level of the static model.;The second essay presents a model of tariff war involving n resource-importing countries and a coalition of resource-exporting countries that acts as a resource-cartel, coordinating the extraction paths of their resource-extracting firms. We deal with two different tariff war scenarios. In the first scenario, which we call the bilateral monopoly scenario, all resource-importing countries form a coalition that imposes a common tariff rate on the exhaustible resource. In the second scenario, the resource-importing countries act independently, each imposing its own tariff rate. We compare the outcomes under the two tariff war scenarios and with the free-trade outcome. In our model, it turns out that, given the rate of discount, there is a corresponding threshold level of the marginal cost parameter beyond which the resource-importing countries would prefer bilateral monopoly to world-wide free trade. The higher is the rate of discount, the greater is the corresponding threshold marginal cost level. We study the effects of asymmetry between resource-importing countries on the welfare of the exporting country, and of the importing countries. In the final section, we examine the welfare consequence of splitting the resource stock into two (possibly unequal) parts to serve the two import markets. It turns out that such market segregation is harmful to the exporting country.