International rivalry between landlocked and coastal countries and strategic transportation policies

• Main Authors: Bakar, Normizan, Yasunori, Ishii
• Format: Conference or Workshop Item
• Language: English
• Published: 2010
• Subjects: HB Economic Theory
• Online Access: http://repo.uum.edu.my/1691/1/Normizan_Bakar%5B1%5D.pdf; http://repo.uum.edu.my/1691/; http://gcoe.ier.hit-u.ac.jp/english/events/past_seminars/index.html

Establishing a Cournot international duopoly model where a firm from a landlocked country (LC) and a firm from a costal country (CC) compete in a third-country market, we analyze international rivalry between the two firms. Since the LC country has no sea port,its firm incurs extra costs to export its goods through the CC's port. We assume that the LC's firm adopts a transport-cost reducing R&D activity and its government subsidizes such R&D, whilst the CC imposes a specific toll fee on the LC's firm in rivalry with the R&D of the LC's firm. We find, inter alia, that since a change in the LC's R&D subsidy(the CC's toll fee) has a positive effect on the LC's (CC's) export and a negative effect on the CC's (LC's) export, the R&D subsidy and the toll fee are both effective as strategic export policies and that the optimal levels for these strategic policies are both positive.