Symbiotic Production and Optimal Export Policy

Abstract. This paper constructs a two-country trade model to examine the optimal policies on the exports of final and intermediate products under Cournot as well as Bertrand competition when firms engage in symbiotic production internationally. The paper shows that given linear demand for the final product, the optimal export policies are to tax the exports of both the final and intermediate goods under symbiotic production, no matter whether firms engage in Cournot or Bertrand competition in the final good market, which is contrary to the conventional wisdom