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Dynamics and Discriminatory Import Policy

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  • Ted To

    (University of Warwick)

Abstract

Although the GATT prohibits discriminatory import tariffs, it includes means for circumventing this prohibition. The previous literature uses static models and discriminatory tariffs increase welfare. In a dynamic model, if governments lack the ability to precommit, this is not necessarily true. For example, with consumer switching costs, tariffs are higher for firms with higher market share. Rationally expecting such policies, firms price less aggressively. If switching costs are significant relative to asymmetries, then higher prices can result in lower importing country welfare. Thus it may be in interests of importers to abide by the GATT MFN principle.

Suggested Citation

  • Ted To, 1996. "Dynamics and Discriminatory Import Policy," International Trade 9602001, University Library of Munich, Germany, revised 28 Nov 1998.
    • Handle: RePEc:wpa:wuwpit:9602001
    Note: forthcoming in Candian Journal of Economics; Type of Document - LaTeX; prepared on IBM PC; to print on any; pages: 14; figures: none
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    References listed on IDEAS

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    Cited by:

    1. Elder, Erick & To, Ted, 1999. "Consumer switching costs and private information," Economics Letters, Elsevier, vol. 63(3), pages 369-375, June.
    2. Adina Georgeta Ponea, 2020. "Jurisprudential Analysis in Matters of Discrimination. Jurisdictional Competence of the National Council for Combating Discrimination," Proceedings of the 19th International RAIS Conference, October 18-19, 2020 007ap, Research Association for Interdisciplinary Studies.
    3. Horn, Henrik & Mavroidis, Petros C., 2001. "Economic and legal aspects of the Most-Favored-Nation clause," European Journal of Political Economy, Elsevier, vol. 17(2), pages 233-279, June.

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    More about this item

    Keywords

    discriminatory tariffs; trade policy; switching costs; market share;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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