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The importance of fixed costs in the design of trade policies: An exercise in the theory of second best

Author

Listed:
  • Luis Corchón

    () (Universidad de Alicante)

  • Miguel González-Maestre

    (Universidad Autónoma de Barcelona)

Abstract

In this paper we study the optimal trade policy in an oligopolistic market with a given number of quantity-setter firms. It is shown that under no fixed costs, the optimal trade policy displays certain characteristics but under fixed costs most of these characteristics no Longer hold.

Suggested Citation

  • Luis Corchón & Miguel González-Maestre, 1994. "The importance of fixed costs in the design of trade policies: An exercise in the theory of second best," Working Papers. Serie AD 1994-16, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:1994-16
    as

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    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-1994-16.pdf
    File Function: Fisrt version / Primera version, 1994
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    Keywords

    Optimal trade policy; tariffs; quotas;

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