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On Some Unresolved Issues in Optimum Tariff Theory

In: Trade, Planning and Rural Development

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  • Wahidul Hague

Abstract

J.S. Mill1 conjectured that a country may gain, compared to a free-trade position, by imposing an optimum tariff. The conjecture, of course, has been verified by Bickerdike2 and Edgeworth3 for the case of two goods. The general case for two goods is still open: although it is generally believed that optimal tariff must be non-negative, J. de V. Graaff4 has argued that optimum tariff would be negative if Giffen effects are sufficiently strong in the tariff-imposing (home) country. Murray Kemp5 has objected to Graaff’s position by saying that ‘any peculiarities of home demand are irrelevant to the determination of the sign of the optimal tariff’ although, he thought, Giffenness abroad could affect this sign. Graaff also said (without proof) that some optimal tariffs may be negative if there are more than two goods.

Suggested Citation

  • Wahidul Hague, 1990. "On Some Unresolved Issues in Optimum Tariff Theory," Palgrave Macmillan Books, in: Azizur Rahman Khan & Rehman Sobhan (ed.), Trade, Planning and Rural Development, chapter 3, pages 27-35, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-11415-3_4
    DOI: 10.1007/978-1-349-11415-3_4
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