Discriminatory Tariffs and Campaign Contributions
Resource
經濟論文叢刊, 35(2), 155-182
Journal
經濟論文叢刊
Journal Volume
35
Journal Issue
2
Pages
155-182
Date Issued
2007-06
Date
2007-06
Author(s)
Hsu, S.Y.
Hwang, H.
Lin, Y.S.
Abstract
This paper studies discriminatory import policy in an oligopoly model in which the foreign firms may influence the incumbent government's policy via campaign contributions. It is shown that given a linear demand, the optimal policy is to impose a tax (subsidy) if the government has a high affinity for social welfare (campaign contributions). Moreover, the tariff difference is influenced by two factors: the government's valuation of social welfare relative to contributions, and the cost difference among the firms. Furthermore, when the government cares more for social welfare, the tariff will be higher (lower) for the firm with lower (higher) average cost. In contrast, if the government places a high weight on campaign contributions, the optimal import policy is to subsidize imports and firms with lower (higher) average cost will be given a higher (lower) subsidy.
Subjects
政治獻金
差別性關稅
campaign contributions
discriminatory tariffs
Type
journal article