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Trade Policy and Public Ownership

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Author Info

  • Ngo Van Long

    ()
    (Department of Economics, McGill University, Montreal)

  • Frank Staehler

    ()
    (Department of Economics, University of Otago)

Abstract

This paper discusses the influence of public ownership on trade policy instruments. We demonstrate three important invariance results. First, the degree of public ownership affects neither the level of socially optimal activities nor welfare if the government chooses optimal trade policy instruments. Second, in the case of rivalry between domestic export firms, the optimal export tax is independent of the degree of public ownership. Third, in the case of rivalry in the home market, the optimal import tariff is independent of the degree of public ownership. In this case, the optimal production subsidy decreases with public ownership if the optimal tariff is positive. For the case of Cournot rivalry in a third market, the optimal export subsidy is an increasing function of the public ownership share, while in the case of Bertrand rivalry with differentiated products, the optimal export tax is an increasing function of that parameter.

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File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0608.pdf
File Function: First version, 2006
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Bibliographic Info

Paper provided by University of Otago, Department of Economics in its series Working Papers with number 0608.

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Length: 35 pages
Date of creation: Dec 2006
Date of revision: Dec 2006
Handle: RePEc:otg:wpaper:0608

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Keywords: Public ownership; trade policy;

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