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Export-promoting Protection: Endogenous Monopoly and Price Disparity

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  • JAGDISH BHAGWATI

    (Political Science at Columbia University, N.Y. (USA),)

Abstract

This note shows that protection-induced export promotion can arise even in the absence of economies of scale, which have been long analysed as factors sliding an import~ubstituting industry up the scale of comparative advantage and turning it into an exporter eventually. Even with an upward-tiloping marginal-cost curve, a domestic monopolist can be protected and could then charge discriminatory prices in domestic and export markets, thus becoming an exporter whereas free trade would have destroyed the monopoly and led to imports instead.

Suggested Citation

  • Jagdish Bhagwati, 1988. "Export-promoting Protection: Endogenous Monopoly and Price Disparity," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 27(1), pages 1-5.
    • Handle: RePEc:pid:journl:v:27:y:1988:i:1:p:1-5
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    File URL: http://www.pide.org.pk/pdf/PDR/1988/Volume1/1-5.pdf
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    References listed on IDEAS

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    1. Jagdish N. Bhagwati, 1978. "Anatomy of Exchange Control Regimes," NBER Chapters, in: Foreign Trade Regimes and Economic Development: Anatomy and Consequences of Exchange Control Regimes, pages 7-52, National Bureau of Economic Research, Inc.
    2. R. Pomfret, 1975. "Some interrelationships between import substitution and export promotion in a small economy," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 111(4), pages 714-727, December.
    3. Basevi, Giorgio, 1970. "Domestic Demand and Ability to Export," Journal of Political Economy, University of Chicago Press, vol. 78(2), pages 330-337, March-Apr.
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    Cited by:

    1. Chia Chiun Ko & Paul Frijters & Gigi Foster, 2018. "A Tale of Cyclones, Exports and Surplus Forgone in Australia's Protected Banana Industry," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 276-300, September.
    2. Mario Tello, 1992. "Precios relativos, producción interna y exportaciones en modelos de competencia imperfecta doméstica y mercados segmentados," Documentos de Trabajo / Working Papers 1992-107, Departamento de Economía - Pontificia Universidad Católica del Perú.

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