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Import tariff upstream versus export tax downstream: are they welfare equivalent?

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  • Hisashi Hokari
  • Hong Hwang
  • Hiroshi Ohta

Abstract

Along the lines of the strategic trade policy inquiry under vertical structures we show that two rival governments may select different rates of export subsidies and import tariffs respectively upon their own industries even if their marginal costs are identical. Moreover, regardless of any combination of these policy instruments optimally introduced, we show that each nation's welfare level will remain the same and higher than that under free trade with no trade policy at all.

Suggested Citation

  • Hisashi Hokari & Hong Hwang & Hiroshi Ohta, 2003. "Import tariff upstream versus export tax downstream: are they welfare equivalent?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(3), pages 247-256.
    • Handle: RePEc:taf:jitecd:v:12:y:2003:i:3:p:247-256
    DOI: 10.1080/0963819032000132085
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    References listed on IDEAS

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    1. G. M. Grossman & K. Rogoff (ed.), 1995. "Handbook of International Economics," Handbook of International Economics, Elsevier, edition 1, volume 3, number 3.
    2. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455, Elsevier.
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    Cited by:

    1. Gjermund Nese & Odd Straume, 2007. "Industry Concentration and Strategic Trade Policy in Successive Oligopoly," Journal of Industry, Competition and Trade, Springer, vol. 7(1), pages 31-52, March.
    2. Gjermund Nese & Odd Straume, 2007. "Industry Concentration and Strategic Trade Policy in Successive Oligopoly," Experimental Economics, Springer;Economic Science Association, vol. 7(1), pages 31-52, March.
    3. Mantian Xue, 2022. "“Spare Wheel” R&D in vertically related markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(4), pages 1105-1112, June.

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