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Effects of Multilateral Trade Liberalization on Prices

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Author Info

  • Jota Ishikawa
  • Hiroshi Mukunoki

Abstract

To analyze the effects of simultaneous tariff reductions by multiple importing countries on prices, we construct a simple three-country model where a good is produced by a monopolist with nonconstant marginal cost and imported by two countries. We compare two representative tariff-reduction formulas: the "fixed-amount" and the "uniform percentage" reductions. The uniform percentage reductions may increase the consumer price in the importing country, whose initial tariff is lower. Thus, importing countries with relatively low tariffs may prefer a bilateral trade agreement to a multilateral one to ensure consumer gains. Copyright � 2008 The Authors; Journal compilation � 2008 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 16 (2008)
Issue (Month): 1 (02)
Pages: 37-44

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Handle: RePEc:bla:reviec:v:16:y:2008:i:1:p:37-44

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Cited by:
  1. Fujiwara, Kenji, 2014. "Pareto-improving tariff-tax reforms under imperfect competition," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 12-20.
  2. Kenji Fujiwara & Ryoma Kitamura, 2013. "A trade and domestic tax reform in imperfectly competitive markets," Discussion Paper Series 099, School of Economics, Kwansei Gakuin University, revised Jan 2013.
  3. Jota Ishikawa & Yoichi Sugita & Laixun Zhao, 2008. "Commercial Policy and Foreign Ownership," Global COE Hi-Stat Discussion Paper Series gd08-005, Institute of Economic Research, Hitotsubashi University.
  4. Kenji Fujiwara, 2013. "A Win–Win–Win Tariff–Tax Reform under Imperfect Competition," Review of International Economics, Wiley Blackwell, vol. 21(5), pages 857-867, November.
  5. Kenji Fujiwara, 2013. "Tax Principles and Coordination of Trade and Domestic Policies under Imperfect Competition," Discussion Paper Series 112, School of Economics, Kwansei Gakuin University, revised Nov 2013.

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