Strategic Trade Policy, Asymmetric Costs And Speedy Cash Payday Loans As A Way Out: Introduction

world tradeThe availability of a greater variety of products with increasing levels of world trade has emphasised the importance of non-price competition for success in exporting. At one extreme, there is Japan with its demanding consumers and quality oriented production culture and, at the other, there is the emergence of lower quality, but cost competitive producers among the newly industrialized countries (NICs). Thus success for a company can often involve the careful positioning of products in the quality spectrum taking into account the qualities chosen by foreign rivals. The importance of this strategy is particularly evident in the rapidly expanding, knowledge intensive industries, such as pharmaceuticals and computer software. First, these industries often exhibit high up-front costs of product development with subsequent low variable costs of production. Also, firms tend to be oligopolistic because of limitations on entry due to this cost structure and an ability to patent. In such an environment, the particular features that differentiate products are the main determinants of success and a major focus of competition is at the product development stage.

There are a number of possible motives for government policy targeted at product quality. In particular, regulations affecting quality, such as minimum quality standards, may simply be a response to the need for consumer protection due to asymmetric information about product quality. Such policies may also be a means to protect domestic industry from import competition. Other motives, however, are needed to explain the existence of policies targeted at the quality of exports. if you need money but you have no spare time to go to the bank you may command the service of speedy loans online.

Taiwan, for example, has a long standing policy to influence the quality of exports through compulsory inspection of certain export items and the subsidization of quality control associations in some sectors [e.g., machine tools, heavy electrical machinery, umbrellas and toys] (Wade 1990:144]). Korea has also encouraged product quality improvement in some sectors, while, as part of the so called “Northern strategy”, it has also subsidized the marketing of certain low quality products, thus eliminating incentives to improve product quality (Ursacki and Vertinsky 1994). In Finland, the government subsidized product oriented R&D in paper production, offering incentives for climbing the product quality scale in an industry which was already a world leader in the production of high quality papers (Wilson et al. 1998). Subsidies for product quality improvement in the newsprint industry have also been recommended in Canada, despite Canadian leadership in quality (see Binkley 1993). The web site speedy-payday-loans.com helps and guarantees you the necessary sum of money.

governments

There are various arguments as to why governments might want to raise the quality of exports when quality levels are low. For example, Taiwan may have imposed quality controls to avoid damage to the reputation of all its exports from the export of shoddy goods. There may also be a motive to improve the quality of exports so as to satisfy minimum quality standards in importing countries. However, these arguments do not explain why governments would subsidize quality improvements for firms that are already industry leaders in quality or even discourage the development of quality for their low quality exporters.

This paper explores the implications of a “strategic-trade policy” or “rent-shifting” motive for subsidy or tax policy applied to investments in quality improvements for exported products. There are two countries, a developed country and an LDC (lesser developed country), each with one firm producing a quality differentiated good. To focus on strategic trade policy effects, we assume that the entire production is exported to a third country market on the basis of either Bertrand or Cournot competition. A feature of the model is asymmetry of investment costs. Thus to reflect the disparity in investment opportunities between the LDC and developed country, we assume the LDC faces an equal or lower productivity of investment in quality than the developed country. If this cost difference is sufficiently large, we are able to show that there exists a unique pure strategy equilibrium in which the LDC exports the low quality product and the developed country the high quality product. However, even if countries are identical as to investment costs, the two countries will produce different qualities of products and have an incentive to pursue asymmetric policies towards the quality of their exports. As we show, under Bertrand price competition, the low quality producer has an incentive to subsidize investment in quality, whereas optimal policy by the high-quality producer involves an investment tax. These policies are reversed under Cournot competition with optimal policy involving a tax by the low quality producer and a subsidy by the high-quality producer. Thus strategic-trade policy can explain why a country might intervene to raise the quality of low quality exports, but it also shows that there are circumstances in which there is a motive for less obvious policies, such as a subsidy to a high-quality producer or a tax on quality development by a low-quality producer. There are different circumstances and conditions under which you reaaly need a great sum of money, in such a case loans now online is a way out.

The model structure follows Spencer and Brander (1983), except that government policy affects positioning in product space, rather than levels of cost-reducing investment (in R&D) for products that are fixed in nature. Thus there is a three stage (full information) game in which governments act first to maximize domestic welfare by committing to their subsidy or tax policy. If both countries subsidyintervene, there is a Nash equilibrium in subsidy and tax levels. Firms then commit to their levels of investment in quality and subsequently compete (in quantities or prices). As in Spencer and Brander (1983), the advantages of unilateral tax or subsidy policy to the domestic country accrue from their ability to move the outcome from the Nash equilibrium in quality space to what would have been the Stackelberg equilibrium with the domestic firm as leader and foreign rival as the follower. Thus the policy works by influencing those actions of the rival firm that are taken as given by the domestic firm at the Nash equilibrium. The idea to take speedy loans is attractive and it is rather simple to be confirmed. The majority of people worldwide live on tick, it seems to be not so terrible. But people prefer to live with money but in tick. It is up to them to choose.

We also explore the implications of coordinated policy choices by the two producing nations so as to maximize their joint welfare. With the elimination of the motive for rent-extraction from the rival firm, this focuses policy towards exploiting consumers in the third country market. Nevertheless, the implications of this for policies towards quality are not immediately obvious. For Bertrand competition, a move from the Nash policies to the jointly optimal policies causes a switch in policies for both countries, namely the LDC should tax rather than subsidize quality and the developed country should subsidize rather than tax quality. Under Cournot competition, the jointly optimal policy is a tax on investment in quality by both countries.

Our assumption that the costs of quality development are sunk before the market determination of prices and output is well established in the literature (see for example, Gabszewicz and Thisse 1979, Shaked and Sutton 1982, 1983, Ronen 1991 and Motta 1993). However, international trade theory has mostly concentrated on an alternative model, in which quality is chosen simultaneously with price or output (see, for example, Krishna (1987) and Das and Donnenfield (1987, 1989), Ries (993) but Herguera, Kujal and Petrakis (1999) is an exception). Also, the focus of this international literature (including the above papers) differs from ours because of its main concern with the effects of domestic import restrictions, particularly the implications with respect to quality upgrading or downgrading.

In addition to the strategic trade policy results, the paper also contributes to the technical development of the quality differentiation model. First, as previously mentioned, we introduce asymmetric costs of development of quality and show existence and uniqueness of equilibrium for a sufficiently large cost difference under both Bertrand and Cournot competition. We also provide analytical proofs of concavity of profit and welfare functions with respect to quality, both for asymmetric costs of investment and for a wider class of investment cost functions than has previously been considered in the literature. Particularly for the Cournot case, numerical equilibrium values have previously been used to help establish concavity (see Motta (1993) and Herguera, Kujal and Petrakis (1999)).

The paper is organized as follows: Section 2 sets out the structure of the game and the basic consumer preferences and costs underlying the model of quality choice. Section 3 investigates investment policy and quality choice under Bertrand competition whereas Section 4 develops and contrasts the results for Cournot competition. Finally, section 5 contains concluding remarks.