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Tariff escalation and de-escalation: the role of market structure

Author

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  • Yungho Weng

    (National Chengchi University)

  • Chih-Ming Hung

    (Chung-Hua Institution for Economic Research)

Abstract

We adopt the conjectural variations approach to explore the rationale for tariff escalation and de-escalation. The main findings indicate that it is a welfare maximization choice for the importing country to adopt an escalated, unified, and/or de-escalated tariff scheme; nevertheless, the escalated tariff scheme is more likely to be chosen, while a unified tariff is the least likely to be adopted. Both potential market size and market structure in the importing country play essential roles for government to make the choices.

Suggested Citation

  • Yungho Weng & Chih-Ming Hung, 2020. "Tariff escalation and de-escalation: the role of market structure," The Japanese Economic Review, Springer, vol. 71(2), pages 233-246, April.
    • Handle: RePEc:spr:jecrev:v:71:y:2020:i:2:d:10.1007_s42973-019-00012-z
    DOI: 10.1007/s42973-019-00012-z
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    More about this item

    Keywords

    Escalated tariff; De-escalated tariff; Conjectural variations;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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