Optimal Production Tax and Quota under Time Consistent Trade Policies
AbstractThis article investigates the policy active importers' incentives and welfare implications of using production and trade policies in a dynamic framework where production decisions occur before consumption decisions. We show that the equilibrium for production taxes and quotas are not equivalent, and that each equilibrium depends on whether the trade policy instruments are tariffs or quotas. Under import quotas, the equilibrium policy is to tax domestic production, whereas under a tariff either a production tax or subsidy may be optimal. We also show that a collective agreement to ban production policies is likely to be welfare-improving in many circumstances. Copyright 2001, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 83 (2001)
Issue (Month): 4 ()
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Other versions of this item:
- Gervais, Jean-Philippe & Lapan, Harvey E., 2001. "Optimal Production Tax and Quota Under Time Consistent Trade Policies," Staff General Research Papers 5049, Iowa State University, Department of Economics.
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- Gervais, Jean-Philippe & Lapan, Harvey E., 2002.
"Endogenous Choice of Trade Instrument Under Uncertainty,"
Staff General Research Papers
5135, Iowa State University, Department of Economics.
- Gervais Jean-Philippe & Harvey E. Lapan, 2002. "Endogenous Choice of Trade Instrument Under Uncertainty," International Economic Journal, Taylor & Francis Journals, vol. 16(4), pages 75-96.
- Abdessalem Abbassi & Lota D. Tamini & Ahlem Dakhlaoui, 2013. "Production Cost Asymmetry, Minimum Access and Reciprocal Dumping," Cahiers de recherche CREATE 2013-7, CREATE.
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