An analysis of the MFN clause under asymmetries of cost and market structure
AbstractWe conduct a welfare comparison of MFN and tariff discrimination in an oligopoly model of trade between two exporting countries and one importing country. While MFN dominates tariff discrimination from a world welfare perspective when exporting countries are asymmetric with respect to either cost or market structure, such need not be the case when both types of asymmetries co-exist. In particular, when high-cost exporters are merged and the cost disadvantage of the merged unit relative to competing firms is of intermediate magnitude, tariff discrimination can be welfare preferred to MFN (even when the average tariff is actually lower under MFN).
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 38 (2005)
Issue (Month): 1 (February)
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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
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Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
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- Nigar Hashimzade & Hassan Khodavaisi & Gareth Myles, 2011. "MFN Status and the Choice of Tariff Regime," Open Economies Review, Springer, vol. 22(5), pages 847-874, November.
- Missios, Paul & Yildiz, Halis Murat, 2006. "The role of MFN under asymmetries in environmental standards," Economics Letters, Elsevier, vol. 93(2), pages 297-304, November.
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