▁govern ments ▁can ▁effect ▁a ▁coll us ive ▁outcome ▁between ▁their ▁fir ms , ▁at ▁the ▁exp anse ▁of ▁the ▁third ▁country ▁which ▁imports ▁the ▁good . ▁ ▁Policy ▁applications ▁and ▁applied ▁work ▁ ▁General ▁difficulties ▁ ▁As ▁pointed ▁out ▁by ▁Paul ▁K rug man , ▁the ▁Br ander – S pen cer ▁model , ▁due ▁to ▁the ▁sens itivity ▁of ▁the ▁results ▁to ▁its ▁assumptions , ▁does ▁not ▁establish ▁a ▁generally ▁applicable ▁policy ▁pres cription ▁in ▁favor ▁of ▁government ▁subs id ies . ▁R ather , ▁it ▁provides ▁an ▁example ▁for ▁when ▁such ▁inter vention ▁may ▁be ▁just ifiable ▁and ▁points ▁to ▁some ▁conditions ▁which ▁may ▁favor ▁it . ▁ ▁A ▁general ▁difficulty ▁with ▁the ▁application ▁of ▁the ▁model , ▁like ▁many ▁game ▁the or etic ▁models , ▁is ▁that ▁it ▁does ▁not ▁easily ▁l end ▁itself ▁to ▁econ ometric ▁testing ▁and ▁parameter ▁estimation . ▁As ▁a ▁result , ▁the ▁two ▁a ven ues ▁of ▁empir ical ▁research ▁that ▁have ▁been ▁purs ued ▁in ▁subsequent ▁literature ▁have ▁been ▁estimates ▁of ▁a ▁" con ject ural ▁variation " ▁parameter ▁for ▁particular ▁indust ries , ▁and ▁cal ibration ▁of ▁the ▁models ▁using ▁behavior al ▁parameters ▁from ▁other ▁studies . ▁The ▁former ▁approach ▁assumes ▁that ▁fir ms ▁have ▁a ▁" con ject ure " ▁as ▁to ▁how ▁the ▁other ▁fir ms ▁will ▁react ▁to ▁their ▁own ▁choice ▁of ▁output ▁and ▁base ▁their ▁decision ▁on ▁this ▁belief . ▁However , ▁the ▁approach ▁is ▁problem atic , ▁both ▁from ▁an ▁analyt ical ▁( it ▁is ▁not ▁internally