Tariff strategies and small open economies
AbstractIn this paper we examine the issue of optimal tariffs for a small economy that trades with a large economy. We define "small" and "large" in the sense that the world prices are determined solely by the large country, and, therefore, the small country faces exogenously given world prices. Within this framework it is shown that there exist situations in which the small country has an incentive to behave as a Stackelberg leader by committing itself to a non-zero optimal tariff. Although the small country is unable to directly affect world prices, by pre-committing to a non-zero trade tax it may induce a reduction of the large country's optimal trade tax, thereby indirectly improving its terms of trade and welfare.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 33 (2000)
Issue (Month): 1 (February)
Contact details of provider:
Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
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Other versions of this item:
- Pascalis Raimondos-Møller & Alan D. Woodland, 1997. "Tariff strategies and small open economies," CIE Discussion Papers 1997-23, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
- Pascalis Raimondos-Møller & Alan D. Woodland, . "Tariff Strategies and Small Open Economies," EPRU Working Paper Series 97-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F35 - International Economics - - International Finance - - - Foreign Aid
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- Gjermund Nese & Odd Rune Straume, 2005.
"Industry Concentration and Strategic Trade Policy in Successive Oligopoly,"
CESifo Working Paper Series
1439, CESifo Group Munich.
- Gjermund Nese & Odd Straume, 2007. "Industry Concentration and Strategic Trade Policy in Successive Oligopoly," Journal of Industry, Competition and Trade, Springer, vol. 7(1), pages 31-52, March.
- Nese, Gjermund & Straume, Odd Rune, 2004. "Industry concentration and strategic trade policy in successive oligopoly," Working Papers in Economics 10/04, University of Bergen, Department of Economics.
- Kempf, H. & Rota Graziosi, G., 2010. "Endogenizing leadership in tax competition: a timing game perspective," Working papers 299, Banque de France.
- Kempf, Hubert & Rota-Graziosi, Grégoire, 2010. "Endogenizing leadership in tax competition," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 768-776, October.
- Gjermund Nese & Odd Straume, 2007. "Industry Concentration and Strategic Trade Policy in Successive Oligopoly," Experimental Economics, Springer, vol. 7(1), pages 31-52, March.
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