TY  - JOUR
AU  - Krishna,Kala
TI  - High Tech Trade Policy
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2182
PY  - 1989
Y2  - February 1989
UR  - http://www.nber.org/papers/w2182
L1  - http://www.nber.org/papers/w2182.pdf
N1  - Author contact info:
Kala Krishna
Department of Economics
523 Kern Graduate Building
The Pennsylvania State University
University Park, PA 16802
Tel: 814/865-1106
Fax: 814/863-4775
E-Mail: kmk4@psu.edu
M1  - published as Kala Krishna. "High-Tech Trade Policy," in Robert E. Baldwin, Carl B. Hamilton and Andre Sapir, editors, "Issues in US-EC Trade Relations" University of Chicago Press (1988)

AB  - This paper analyzes the role of network externalities and expectations about them in the formulation of trade policy. Their effects are studied in duopoly situations when products are compatible and when they are incompatible and when multimarket effects are possible. Network externalities and expectations regarding the size of the network affect optimal trade policy in three ways. First, the presence of expectations effects creates a role for 'policy if. there are differences between the way the externalities operate and expectations about how they operate. Second, when goods are compatible, the existence of network externalities can cake goods complementary which reverses the direction of optimal policy. .Third, since multimarket effects occur naturally with network externalities and compatible products, purely domestic policies, which are legal under GATT, can have international profit shifting effects which may be in the national 'interest.
ER  -