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Backfiring Tariffs in Vertically Related Markets

In: Strategic Trade Policy

Author

Listed:
  • Jota Ishikawa
  • Ki-Dong Lee

Abstract

This chapter examines the effects on the domestic economy of domestic tariffs imposed on an intermediate good or a final good in vertically related markets which are characterized by Cournot oligopolies. Tariffs could lead a foreign firm to enter or exit from the domestic final-good market. Some of our results are counterintuitive. It is particularly shown that tariffs on the intermediate good which induce the entry could harm domestic intermediategood producers and/or benefit domestic final-good producers; and that tariffs on the final good which induce the exit could harm both domestic intermediate-good and final-good producers.

Suggested Citation

  • Jota Ishikawa & Ki-Dong Lee, 2026. "Backfiring Tariffs in Vertically Related Markets," World Scientific Book Chapters, in: Strategic Trade Policy, chapter 12, pages 269-305, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789819805921_0012
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F1 - International Economics - - Trade
    • F10 - International Economics - - Trade - - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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