Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry
AbstractThis paper examines the incentives for using tariffs to extract monopoly rents from imperfectly competitive foreign firms. Using a simple Stackelberg entry deterrence model, the rent-extracting policy is attractive if the foreign firm faces a threat of domestic entry. Despite transportation costs, the Stackelberg leader-follower model can lead to intra-industry trade in the same commodity.
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Bibliographic InfoPaper provided by Queen's University, Department of Economics in its series Working Papers with number 414.
Date of creation: 1980
Date of revision:
Other versions of this item:
- James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-89, August.
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