Three essays on international competition and trade.

This dissertation consists of three essays on international competition and trade. New trade theory literature has not paid much attention to the existence of competition policy in an imperfectly competitive market on which most models in this strand have a basis. The first chapter examines possible implications of a domestic competition policy in international trade models, particularly employing an imperfectly competitive market structure. It is shown that a government may have an incentive for the lax enforcement of competition policy to provide its domestic firms with strategic advantage over competing foreign firms. The second chapter considers a regulatory competition in the context of strategic trade policy. Since domestic regulatory policies can indirectly affect comparative advantage by changing the regulatory environment, international competitiveness may be altered by regulatory competition. Using imperfect competition, I presents models that explain a 'race to the bottom' and a 'race for the top' of regulation, depending on the nature of competition. It is also shown that the presence of international cross-ownership reduces the incentive to manipulate domestic regulation for a strategic reason. Along with the result of the first chapter, strategic incentives to engage in regulatory competition indeed manifest the need for international harmonization and cooperation to assure free trade. The third chapter examines how the decisions of foreign and domestic manufacturers to locate in a particular state are influenced by a state's characteristics, using the data of the period 1986-1991. Two econometric models are employed to address the different stages of a plant birth procedure: a conditional logit model for a firm's decision of where to locate and a Poisson regression model for examining a decision of whether to open a new plant. The empirical evidence shows that foreign direct investment and domestic business location have been affected by different sets of state characteristics and that different stages of a foreign plant birth are also influenced by different features of states. This difference between foreign and domestic business location may be explained by strategic incentives such as quid pro quo foreign direct investment.Ph.D.Economic theoryEconomicsSocial SciencesUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/129748/2/9624560.pd