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Nominal and Optimum Tariffs under Variable Returns to Scale

Author

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  • Choi, Jai-Young
  • Yu, Eden S H

Abstract

This paper analyzes the effects of a tariff on the import demand, the terms of trade, and the domesti c price ratio in a large-country framework incorporating variable ret urns to scale. It is shown that an improvement in the terms of trade for a given tariff may dampen the demand for imports, while a higher tariff for given terms of trade may raise it. An increase in the rate of tariff need not improve the terms of trade and hence may raise th e domestic price ratio of the importable commodity by more than the t ariff rates. Copyright 1987 by Royal Economic Society.

Suggested Citation

  • Choi, Jai-Young & Yu, Eden S H, 1987. "Nominal and Optimum Tariffs under Variable Returns to Scale," Oxford Economic Papers, Oxford University Press, vol. 39(4), pages 785-798, December.
    • Handle: RePEc:oup:oxecpp:v:39:y:1987:i:4:p:785-98
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    Cited by:

    1. Chao, Chi-Chur & Yu, Eden S. H., 1995. "The shadow price of foreign exchange in a dual economy," Journal of Development Economics, Elsevier, vol. 46(1), pages 195-202, February.
    2. Biswas, Rajit, 2014. "Metzler paradox and home market effects in presence of internationally mobile capital and non-traded goods," MPRA Paper 56335, University Library of Munich, Germany.
    3. Choi, Jai-Young & Price, Donald I. & Allen, C. Larry, 1997. "Further implications of tariffs in the mobile capital Harris-Todaro model," International Review of Economics & Finance, Elsevier, vol. 6(1), pages 87-102.

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