On Strategic Trade Policies in the Three-Country Model: Endogenous Timing and its Economic Interpretation* by

This paper explains why a government with the fewer number of firms chooses its trade policy first and provides a subsidy to home firms, whereas a government with the larger number of firms moves second and imposes a tax on domestic firms in the three-country model. This paper also extends the Brander and Spencer (1985) result that the unilateral intervention equilibrium is replicated as the Stackelberg duopoly to an economy with multiple firms in each country. This replication enables to show that bilateral sequential intervention induces a more concentrated market structure