IDEAS home Printed from
   My bibliography  Save this paper

The Chocie of Optimal Protection and Oligopoly: Import Tariffs vs Production Subsidies


  • Tsuyoshi Toshimitsu

    () (School of Economics, Kwansei Gakuin University)


This paper analyzes the choice of import tariffs and production subsidies to provide optimal protection of domestic industry in the presence of oligopolistic competition, provided that there is a difference in costs between domestic and foreign firms. We show that the choice of optimal protection depends both on the difference in firms' costs and the relative number of firms across countries. First, in the case that the number of foreign firms is larger, an optimal protection is a production subsidy, regardless of the difference in costs. Second, in the case that the number of foreign firms is equal to, or less than that of domestic firms, an import tariff provides optimal protection if the difference in costs is large, while a production subsidy provides optimal protection if the differece in costs is small.

Suggested Citation

  • Tsuyoshi Toshimitsu, 1997. "The Chocie of Optimal Protection and Oligopoly: Import Tariffs vs Production Subsidies," Discussion Paper Series 19, School of Economics, Kwansei Gakuin University, revised Oct 1997.
  • Handle: RePEc:kgu:wpaper:19

    Download full text from publisher

    File URL:
    File Function: First version, 1997
    Download Restriction: no

    References listed on IDEAS

    1. Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
    2. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kgu:wpaper:19. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Toshihiro Okada) or (Rebekah McClure). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.