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Trade Policy and Market Structure Interactions in Developing Countries

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  • International Monetary Fund

Abstract

This paper shows that the presence of quotas on imported inputs that are based on installed capacity can lead to capacity underutilization in manufacturing industries of developing countries. A replacement of such quotas, by tariffs leads to full capacity utilization under assumptions of both perfectly and imperfectly competitive markets. Furthermore, such a policy also eliminates strategic advantages for oligopolistic firms that arise in quota-based regimes.

Suggested Citation

  • International Monetary Fund, 1989. "Trade Policy and Market Structure Interactions in Developing Countries," IMF Working Papers 1989/091, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1989/091
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    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=28679
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    Cited by:

    1. Federico Etro, 2011. "Endogenous Market Structures And Strategic Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 63-84, February.

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