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

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 inter national ownership on national welfare and world welfare.