Strategic Trade Policy and International Trade in the Presence of International Cross-Ownership

Jae Hyeong Kang ; Kiwoong Cheong ; Sanghack Lee

Associate Professor, International Trade Division, School of Economics, Kookmin University, Seoul 136-702, South Korea
Associate Professor, Department of Business, Keimyung University, Taegu, South Korea
Professor, International Trade Division, School of Economics, Kookmin University, Seoul 136-702, South Korea, Tel: +82-2-910-4546, Fax: +82-2-910-4519 slee@kmu.kookmin.ac.kr

JEL Classification: F12, F13

Abstract

This paper examines the effects of international cross- ownership of firms on trade pattern and social welfare in the three-country trade model in which firms in oligopolistic industry of two countries engage in intra-industry trade and export to the third country as well. The paper shows how international ownership of firms affects trade flow and firm values via strategic trade policies in such a model. The paper also considers the effect of international ownership on national welfare and world welfare.

Keywords:

Strategic trade policy, International cross-ownership, Intra-industry trade, Oligopoly

Acknowledgments

An earlier version of this paper was presented at the conference, “Location of economic activity, regional development and the global economy,” University of Le Harve, France, September 26-7, 2001. We wish to thank three anonymous refrees of this Journal and conference participants for their valuable comments and suggestions.

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