| Abstract : | The purpose of this dissertation, entitled “International Trade: Strategies and Policies”, is to present the most important contributions to the area of the “new trade” theory and policy, which revolutionized the way we look into the main questions relating to international trade. The main characteristic of the “newt rade” is the nexus it introduces between market structure and trade.The literature of strategic trade policy has been flourishing since the early‘80s. It was informed by the fact that, in contrast with what one would expect by using the traditional Heckscher‐Ohlin framework, the greater volume of trade was taking place between the more developed countries, which had similar factor endowments and were almost equally technologically developed. The“new trade” theory, by introducing increasing returns to scale and imperfectly competitive markets showed that that phenomenon is well‐justified.The first chapter presents models dealing with international trade under imperfectly competitive market structures. We present models under monopolistic and oligopolistic competition, in which both firms and governments act strategically and we conclude that under these assumptions intra‐industry or two‐way trade arises. We also look into relating issues, such as the “Most Favoured Nation” principle and the occurrence of delegation in customs unions.The second chapter examines various tools of trade policy and the way the strategic interaction between firms and governments actual affects those policies. With the introduction of imperfections in the markets, policy makers think of ways to turn these imperfections to their favor in order to raise their country’s welfare. This observation provided the stimulus for the blossoming of a literature, regarding the use of export subsidies, more commonly referred as the‘profit‐shifting’ literature. More generally, those papers showed how the strategic usage of various policy instruments, such as import tariffs, quotas,export subsidies and voluntary export restraints can improve or deteriorate countries’ welfare.Finally, the third chapter analyses how our results are affected under a symmetric information between firms and governments and uncertainty in demand. It is shown that under asymmetric information the nature of the competition affects the governments’ optimal trade policy choices. Under a symmetric information and uncertainty in demand, one can notice a trade off between the flexibility that is provided by certain policy tools and the commitment gains that are provided by others.
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