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Protection and the Product Line: Monopoly and Product Quality


  • Krishna, Kala


The product-line decision of a monopolist is analyzed and used to study the effect of specific and ad valorem taxes on the entire product line. While specific taxes (or quotas) raise average quality, ad valorem taxes may not. The welfare consequences of such policies when the monopolist is a home one and when he/she is a foreign one are discussed. With a home monopolist, both specific and ad valorem subsidies are welfare improving, while with a foreign monopolist their welfare properties depend on the distribution of consumers. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Krishna, Kala, 1990. "Protection and the Product Line: Monopoly and Product Quality," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 87-102, February.
  • Handle: RePEc:ier:iecrev:v:31:y:1990:i:1:p:87-102

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    References listed on IDEAS

    1. Phlips,Louis, 1983. "The Economics of Price Discrimination," Cambridge Books, Cambridge University Press, number 9780521283946, March.
    2. Falvey, Rodney E, 1979. "The Composition of Trade within Import-restricted Product Categories," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 1105-1114, October.
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    Cited by:

    1. Khan, Nadeem, 1994. "Firm's behavior in the presence of antidumping laws," ISU General Staff Papers 1994010108000011487, Iowa State University, Department of Economics.
    2. José Luis Moraga Gonzales & Jean-Marie Viaene, 2001. "Procompetitive Trade Policies," CESifo Working Paper Series 597, CESifo Group Munich.
    3. Randi Boorstein & Robert C. Feenstra, 1987. "Quality Upgrading and its Welfare Cost in U.S. Steel Imports, 1969-74," NBER Working Papers 2452, National Bureau of Economic Research, Inc.
    4. Claire Chambolle & Eric Giraud-Héraud, 2005. "Certification of Origin as a Non-Tariff Barrier," Review of International Economics, Wiley Blackwell, vol. 13(3), pages 461-471, August.
    5. L. Lambertini, 1995. "Intraindustry Trade Under Vertical Product Differentiation," Working Papers 233, Dipartimento Scienze Economiche, Universita' di Bologna.
    6. Dungey, Mardi & Jacobs, Jan & Lestano, 2010. "Financial crises in Asia: concordance by asset market or country?," Working Papers 10575, University of Tasmania, Tasmanian School of Business and Economics, revised 01 Nov 2010.
    7. Kala Krishna, 1985. "Tariffs vs. Quotas with Endogenous Quality," NBER Working Papers 1535, National Bureau of Economic Research, Inc.
    8. Jose Luis Moraga-Gonzalez & Jean-Marie Viaene, 2003. "An Example of Procompetitive Trade Policies," Working Papers 504, Research Seminar in International Economics, University of Michigan.
    9. Robert C. Feenstra, 1986. "Gains from Trade in Differentiated Products: Japanese Compact Trucks," NBER Working Papers 1978, National Bureau of Economic Research, Inc.
    10. Andaluz, Joaquin, 2000. "On protection and vertical product differentiation," Regional Science and Urban Economics, Elsevier, vol. 30(1), pages 77-97, January.
    11. Ederington, Josh & McCalman, Phillip, 2013. "Technology adoption, government policy and tariffication," Journal of International Economics, Elsevier, vol. 90(2), pages 337-347.
    12. L. Lambertini, 2002. "the Specialization of Production and Labour Mobility Under Endogenous Differentiation," Working Papers 453, Dipartimento Scienze Economiche, Universita' di Bologna.
    13. Daniel Flores Curiel, 2016. "Subsidizing or taxing education? A note on the quality gap and government finances," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 31(2), pages 339-353.
    14. McCalman, Phillip, 2010. "Trade policy in a "super size me" world," Journal of International Economics, Elsevier, vol. 81(2), pages 206-218, July.

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