Content Protection and Oligopolistic Interactions
Kala Krishna, Motoshige Itoh
In oligopolistic situations content protection can have unexpected effects as it changes the nature of interactions between input suppliers. With a duoply, it does so in a manner that makes the foreign firm wish to match price increases and decreases of the domestic firm. Domestic input suppliers can therefore lose from such policies, even when set at free trade levels. The relation between input demands, the form of protection, and the degree of substitution between inputs is shown to define the effects of content protection and to provide the basis for understanding who might lobby for protection in different environments.
Published: Review of Economic Studies, Vol. LV, pp. 107-125, January 1988.