Alternative optimal trade policies in the presence of foreign input monopoly
Journal
Pacific Economic Review
Journal Volume
8
Journal Issue
3
Pages
193-206
Date Issued
2003
Author(s)
Abstract
This paper develops a generalized three-country model with downstream and upstream industries to analyze optimal import and export trade policies in the presence of monopoly distortion in a foreign intermediate input market. It shows that the import tariff and export tax are linearly dependent. Thus, the optimal choice of the tariff gives rise to the same results as the optimal choice of the export tax, which implies that the domestic government, to avoid tariff retaliation, can use export tax as a substitute for the import tariff.
SDGs
Type
journal article