An Experimental Test Of Strategic Trade Policy Under The Differential Bertrand Model

The theory of strategic trade policy has been very active since the beginning of the 1980s.In nature,it is the policy under oligopoly. Eaton and Grossman(1986) found that the optimal trade policy under the Bertrand competition mode for a government should be export tariffs by analyzing the third-market model.This article studies the theory developed by Eaton and Grossman (1986) by experiments which are a new tool and use Chinese graduates as testees and money as the prompting way.Because of the characteristics of the testees' interaction and the possible responses to "policies" and "tariff",five situations are considered to design the experiment.The experimental data is analyzed according to the testees' motives to make a decision and the factors which have an effect on the testees' decision together with maths and statistics,and the experimental result is that the government will not intervene in the international trade,that is,the government will not levy a tax on the exports.Therefore,the conclusions are drawn from economical experiments and the theory itself:firstly, investigations on testees' motives to make decisions and the factors considered when decisions are made should be included;secondly, measures to evaluate the testees' profits should be taken every independent experimental period when the reward could be worked out as for economical experiments;thirdly,on certain conditions ten to twenty independent periods are sufficient for experiments;fourthly,it is hard to meet the hypotheses of the theory developed by Eaton and Grossman (1986);fifthly,the characteristics of the equilibrium were explained by Eaton and Grossman(1986),however,the concrete measures to achieve it are not illustrated.Meanwhile,the successful experiments of this paper supply and accumulate some experiences for the future ones in China which are of such significance as the aspects of designing,methods,data processing and so on.