Is a Threat of Countervailing Duties Effective in Reducing Illegal Export Subsidies?
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The primary objective of this paper is to explore the efficacy of a threat of countervailing measures in reducing illegal export subsidies, by establishing a game-theoretical model to analyze the strategic relationship between exporting and importing countries. Analyzing the strategic incentive for the importing country to respond to export subsidies, this paper provides a rationale for the importing country to impose countervailing measures, thus demonstrating that the importing country increases its countervailing duty on the subsidized imports when the exporting country increases its export subsidies to its exporting firm. Additionally, it is determined that the exporting country’s optimal export subsidy rate is zero when the importing country has a right under the WTO to impose any countervailing duty against subsidized imports, thus implying that a threat of countervailing measures is indeed effective.
Abstract
The primary objective of this paper is to explore the efficacy of a threat of countervailing measures in reducing illegal export subsidies, by establishing a game-theoretical model to analyze the strategic relationship between exporting and importing countries. Analyzing the strategic incentive for the importing country to respond to export subsidies, this paper provides a rationale for the importing country to impose countervailing measures, thus demonstrating that the importing country increases its countervailing duty on the subsidized imports when the exporting country increases its export subsidies to its exporting firm. Additionally, it is determined that the exporting country’s optimal export subsidy rate is zero when the importing country has a right under the WTO to impose any countervailing duty against subsidized imports, thus implying that a threat of countervailing measures is indeed effective.
참고문헌 (8)
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