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Tariff Policy and Multinational Firms : How to Jump Tariff Jumping

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Author Info

  • CORDELLA, Tito

    (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium and Universita di Bologna, Itally)

  • VANNINI, Stefano

    (niversité catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium)

Abstract

Strategic trade policy affects foreign-based firm's internationalization mode. In this paper, by endogenizing market structure and tariff policy, we claim that 'tariff jumping' is not enough to give a rationale to the existence of multinational enterprises, in absence of cost differentials and 'exportation costs' other than tariffs. Despite this first negative result, we show that the study of the strategic interaction between firms and policy-makers, even in such a simple framework, sheds some light on the relationship between national welfare and MNE's competitive advantages, putting on evidence tariff-policy discontinuities.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1993056.

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Date of creation: 01 Nov 1993
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Handle: RePEc:cor:louvco:1993056

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Related research

Keywords: multinational entreprises; tariff policy; tariff jumping; strategic interaction;

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Cited by:
  1. Bughin, Jacques & Vannini, Stefano, 1995. "Strategic direct investment under unionized oligopoly," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 127-145, March.

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