Specific and Ad Valorem Tariffs Are Not Equivalent in Trade Wars

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Specific and Ad Valorem Tariffs Are Not Equivalent in Trade Wars

Author Info

Lockwood, B.
Wong, K.Y.

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Abstract

This note argues that when two countries choose optimal tariffs in a trade war, specific tariffs are not equivalent to ad valorem tariffs even if all markets are competitive. In particular, it shows that if a country's trading partener switches a specific tariff to an an valorem tariff that yields the same revenue at the initial trade point, the former country has an incentive to lower its tariffs.

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Publisher Info
Paper provided by University of Exeter, School of Business and Economics in its series Discussion Papers with number 96/02.

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Length: 9 pages
Date of creation: 1996
Date of revision:
Handle: RePEc:fth:exetec:96/02

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Other versions of this item:

Article
- Lockwood, Ben & Wong, Kar-yiu, 2000. "Specific and ad valorem tariffs are not equivalent in trade wars," Journal of International Economics, Elsevier, vol. 52(1), pages 183-195, October. [Downloadable!] (restricted)
Paper
- Kar-yiu Wong & Ben Lockwood, 1997. "Specific and Ad Valorem Tariffs are not Equivalent in Trade Wars," Working Papers 0081, University of Washington, Department of Economics. [Downloadable!]
- Kar-yiu Wong & Ben Lockwood, 1997. "Specific and Ad Valorem Tariffs are not Equivalent in Trade Wars," Discussion Papers in Economics at the University of Washington 0081, Department of Economics at the University of Washington. [Downloadable!]

Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F11 - International Economics - - Trade - - - Neoclassical Models of Trade
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Susanna Thede, 2005. "Trade Policy Formation when Geography Matters for Specialisation," Working Papers 200519, School Of Economics, University College Dublin. [Downloadable!]
Jan G. Jorgensen & Philipp J. H. Schröder, 2005. "Tariffs and Firm-Level Heterogeneous Fixed Export Costs," Discussion Papers of DIW Berlin 496, DIW Berlin, German Institute for Economic Research. [Downloadable!]
Other versions:
- Jan Guldager Jørgensen & Philipp J. H. Schröder, 2006. "Tariffs and Firm-Level Heterogeneous Fixed Export Costs," The B.E. Journal of Economic Analysis & Policy, Berkeley Electronic Press, vol. 0(1). [Downloadable!]
Jan JÃ¸rgensen & Philipp SchrÃ¶der, 2007. "Effects of Tariffication: Tariffs and Quotas under Monopolistic Competition," Open Economies Review, Springer, vol. 18(4), pages 479-498, September. [Downloadable!] (restricted)
Jan G. Jorgensen & Philipp J. H. Schröder, 2002. "Effects of Tariffication: Tariffs, Quotas and VERs under Monopolistic Competition," Discussion Papers of DIW Berlin 269, DIW Berlin, German Institute for Economic Research. [Downloadable!]
Ben Lockwood, 2004. "Competition in Unit vs. Ad Valorem Taxes," Asia-Pacific Financial Markets, Springer, vol. 11(6), pages 763-772, November. [Downloadable!] (restricted)
Other versions:
- Ben Lockwood, 2004. "Competition in Unit vs. Ad Valorem Taxes," International Tax and Public Finance, Springer, vol. 11(6), pages 763-772, November. [Downloadable!]
Ben Zissimos, 2006. "The GATT and Gradualism," Working Papers 0619, Department of Economics, Vanderbilt University. [Downloadable!]
Other versions:
- Ben Zissimos & Ben Lockwood, 2004. "The GATT and Gradualism," Econometric Society 2004 North American Summer Meetings 607, Econometric Society. [Downloadable!]
- Zissimos, Ben, 2007. "The GATT and gradualism," Journal of International Economics, Elsevier, vol. 71(2), pages 410-433, April. [Downloadable!] (restricted)
Amrita Dhillon & Myrna H. Wooders & Ben Zissimos, 2006. "Tax Competition Reconsidered," Working Papers 0602, Department of Economics, Vanderbilt University. [Downloadable!]
Other versions:
- Wooders, Myrna & Zissimos, Ben & Dhillon, Amrita, 2001. "Tax Competition Reconsidered," The Warwick Economics Research Paper Series (TWERPS) 622, University of Warwick, Department of Economics. [Downloadable!]
- Amrita Dhillon & Myrna Wooders & Ben Zissimos, 2007. "Tax Competition Reconsidered," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 9(3), pages 391-423, 06. [Downloadable!] (restricted)
Jan Guldager Jorgensen & Philipp J.H. Schröder, 2005. "Welfare Effects of Tariff Reduction Formulas," International Trade 0506006, EconWPA. [Downloadable!]

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