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Countervailing Duties, Foreign Export Subsidies and Import Tariffs

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  • Yu‐Ter Wang

Abstract

Given that countervailing duties and import tariffs are set in different ways and for different purposes, I re‐examine the relationship between countervailing duties, foreign export subsidies and import tariffs under imperfect competition. I find that (i) the optimal countervailing duty depends on the existing import tariff level; (ii) the optimal import tariff is so high that the optimal countervailing duty is zero and hence foreign export subsidization occurs; and (iii) it is more likely for countervailing duties to be imposed on a foreign firm whose government takes no action when other foreign countries reduce or eliminate their subsidies on exports.

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  • Yu‐Ter Wang, 2004. "Countervailing Duties, Foreign Export Subsidies and Import Tariffs," The Japanese Economic Review, Japanese Economic Association, vol. 55(2), pages 153-161, June.
    • Handle: RePEc:bla:jecrev:v:55:y:2004:i:2:p:153-161
    DOI: 10.1111/j.1468-5876.2004.t01-2-00299.x
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    References listed on IDEAS

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    1. Dixit, Avinash, 1988. "Anti-dumping and countervailing duties under oligopoly," European Economic Review, Elsevier, vol. 32(1), pages 55-68, January.
    2. Collie, David, 1991. "Export subsidies and countervailing tariffs," Journal of International Economics, Elsevier, vol. 31(3-4), pages 309-324, November.
    3. Qiu, Larry D., 1995. "Why can't countervailing duties deter export subsidization?," Journal of International Economics, Elsevier, vol. 39(3-4), pages 249-272, November.
    4. Bhattacharjea, Aditya, 1995. "Strategic tariffs and endogenous market structures: Trade and industrial policies under imperfect competition," Journal of Development Economics, Elsevier, vol. 47(2), pages 287-312, August.
    5. David Collie, 1994. "Endogenous timing in trade policy games: Should governments use countervailing duties?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 130(1), pages 191-209, March.
    6. Gallaway, Michael P. & Blonigen, Bruce A. & Flynn, Joseph E., 1999. "Welfare costs of the U.S. antidumping and countervailing duty laws," Journal of International Economics, Elsevier, vol. 49(2), pages 211-244, December.
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    Cited by:

    1. Lim, Seonyoung & Choi, Kangsik, 2014. "Strategic Subsidy Policies with Endogenous Choice of Competition Mode," MPRA Paper 59462, University Library of Munich, Germany.
    2. Manitra Rakotoarisoa, 2011. "Strategic Trade Policies Under Monopsony and Uncertainty: The Exporter’s Non-Linear Responses Based on the Organization of Its Industry," Journal of Industry, Competition and Trade, Springer, vol. 11(2), pages 187-201, June.
    3. Choi, Kangsik & Lee, Ki-Dong & Lim, Seonyoung, 2016. "Strategic Trade Policies In International Rivalry When Competition Mode Is Endogenous," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 57(2), pages 223-241, December.
    4. Yu-Ter Wang, 2009. "On the simultaneous elimination of export subsidies under oligopoly," Applied Economics, Taylor & Francis Journals, vol. 41(5), pages 629-631.
    5. Yu‐ter Wang, 2008. "Product Differentiation: An Alternative To Cvds," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 513-517, September.

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