Market Structure and Trade Policy under Asymmetric Information
AbstractThe paper compares tariffs and import quotas when the home firm has private information about its true cost and the government offers incentive contracts to extract this information. We highlight the role of underlying market structure in determining the ranking of the two policy instruments. Our results show that quotas are at least as efficient as tariffs in implementing the optimal level of protection and strictly more for a wide range of market structures. The exact condition for this is identified. Welfare-based ranking of the two instruments follows from this.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0402004.
Length: 31 pages
Date of creation: 05 Feb 2004
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Tariffs versus Quotas; Asymmetric Information; Conjectural Variations;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-02-08 (All new papers)
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