Energy imports and manufacturing exports with successive oligopolies and storage

Many industrial countries run a "business model" that is based on oligopolistic export industries which strongly depend on energy imports. This paper uses an analytically tractable general equilibrium model of international trade with successive oligopolies and storage to analyze optimum trade and industrial policies for such countries. There can be over-investment in storage for strategic reasons. Despite double marginalization, there is a non-zero optimum level of market concentration for the domestic industry. The optimum import tariff is most likely negative. Subsidies to storage and reduced use of long term contracts usually raise domestic welfare.