IDEAS home Printed from https://ideas.repec.org/a/eee/reecon/v66y2012i1p106-109.html
   My bibliography  Save this article

Domestic entry, optimum-welfare and maximum-revenue tariffs

Author

Listed:
  • Wang, Leonard F.S.
  • Lee, Jen-Yao

Abstract

In this paper, we examine the ranking of the maximum-revenue tariff and the optimum-welfare tariff under a linear Cournot oligopoly model without and with free entry of domestic firms. We demonstrate that in a regulated entry oligopoly with asymmetric costs, when the marginal cost of the domestic firms exceeds a critical value, the maximum-revenue tariff is higher than the optimum-welfare tariff. We then show that under free entry of domestic firms with asymmetric costs, when the fixed cost gets larger and the domestic firms become fewer, the difference between the optimum-welfare tariff and the maximum-revenue tariff becomes larger.

Suggested Citation

  • Wang, Leonard F.S. & Lee, Jen-Yao, 2012. "Domestic entry, optimum-welfare and maximum-revenue tariffs," Research in Economics, Elsevier, vol. 66(1), pages 106-109.
  • Handle: RePEc:eee:reecon:v:66:y:2012:i:1:p:106-109
    DOI: 10.1016/j.rie.2011.07.001
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1090944311000378
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Roger Clarke & David R . Collie, 2006. "Optimum-Welfare And Maximum-Revenue Tariffs Under Bertrand Duopoly," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(3), pages 398-408, July.
    2. Mukherjee, Arijit, 2005. "Price and quantity competition under free entry," Research in Economics, Elsevier, vol. 59(4), pages 335-344, December.
    3. Yasuhito Tanaka, 1991. "Negotiated tariffs in free entry oligopoly under integrated markets," Open Economies Review, Springer, vol. 2(2), pages 165-181, June.
    4. Roger Clarke & David R. Collie, 2008. "Maximum-revenue versus Optimum-welfare Export Taxes: a Delegation Game," Review of International Economics, Wiley Blackwell, vol. 16(5), pages 919-929, November.
    5. Leonard Wang & Tai-Liang Chen, 2010. "Do cost efficiency gap and foreign competitors matter concerning optimal privatization policy at the free entry market?," Journal of Economics, Springer, vol. 100(1), pages 33-49, May.
    6. Bruno Larue & Jean-Philippe Gervais, 2002. "Welfare-maximizing and revenue-maximizing tariffs with a few domestic firms," Canadian Journal of Economics, Canadian Economics Association, vol. 35(4), pages 786-804, November.
    7. Leonard Wang & Ya-Chin Wang & Lihong Zhao, 2009. "Market Share Delegation and Strategic Trade Policy," Journal of Industry, Competition and Trade, Springer, vol. 9(1), pages 49-56, March.
    8. Leonard F.S. Wang & Jean Wang & Jen-Yao Lee, 2010. "Optimum-Welfare And Maximum-Revenue Tariffs In Mixed Oligopoly With Foreign Competitors," Australian Economic Papers, Wiley Blackwell, vol. 49(1), pages 60-72, March.
    9. Collie, David, 1991. "Optimum Welfare and Maximum Revenue Tariffs under Oligopoly," Scottish Journal of Political Economy, Scottish Economic Society, vol. 38(4), pages 398-401, November.
    10. Pinopoulos, Ioannis N., 2011. "Input pricing by an upstream monopolist into imperfectly competitive downstream markets," Research in Economics, Elsevier, vol. 65(3), pages 144-151, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Leonard F.S. & Lee, Jen-yao, 2014. "Ranking the optimum tariff and the maximum revenue tariff in vertically related markets," Research in Economics, Elsevier, vol. 68(3), pages 222-229.
    2. Collie, David R., 2018. "Maximum-Revenue Tariffs versus Free Trade," Cardiff Economics Working Papers E2018/8, Cardiff University, Cardiff Business School, Economics Section.

    More about this item

    Keywords

    Cournot competition; Free entry; Tariff ranking;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:reecon:v:66:y:2012:i:1:p:106-109. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/inca/622941 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.