Promoting Imports to Appease Trade Partners: Japan's New Trade Policies

Reverse importing and asymmetric trade and FDI: a networks explanation

“…Existing import promotion policies in Japan may benefit Japanese consumers (including firms purchasing inputs) by compensating for high network costs. As described in Greaney (2001), these policies lower the fixed cost of investing in Japan's market or lower the network costs of "finding" buyers (e.g., by sponsoring import trade fairs to introduce foreign sellers to Japanese buyers).…”

Dynamic Interactions in Trade Policy in a Differential Game Model of Tariff Protection

“…First, an import subsidy is optimal in the feedback Nash equilibria, even with linear demand 4 . This result may provide a theoretical rationale for Japan's import subsidy program documented by Greaney (2001). Second, in the feedback Nash equilibria, each firm quits serving its domestic market, i.e.…”

“…On the one hand, in an influential work, Baier and Bergstrand (2001, p. 19) found evidence showing that “income growth, tariff rate reductions, and transport‐cost declines all contributed nontrivially to the real growth of world trade.” 1 Moreover, they also found that the contribution of tariff reductions is just three times as large as transport cost reductions. On the other hand, Greaney (2001, p. 268) empirically made clear that Japan's import subsidies “benefit both foreign and home producers at the expense of domestic consumers and taxpayers,” which contrasts to the conventional wisdom that foreign firms and domestic consumers gain from import subsidies at the expense of domestic firms and taxpayers. Moreover, there is a growing literature on firm heterogeneity that highlights the role of import subsidies for welfare, e.g.…”