The Chocie of Optimal Protection and Oligopoly: Import Tariffs vs Production Subsidies
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.
|Date of creation:||Oct 1997|
|Date of revision:||Oct 1997|
|Publication status:||Published in the Japanese Economic Review, 2002, vol. 53, issue 3. pp. 301-314.|
|Contact details of provider:|| Postal: 1-155 Uegahara Ichiban-cho, Nishinomiya, Hyogo 662-8501|
Web page: http://www-econ.kwansei.ac.jp/~econ/index_e.html
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dixit, Avinash, 1984. "International Trade Policy for Oligopolistic Industries," Economic Journal, Royal Economic Society, vol. 94(376a), pages 1-16, Supplemen.
- 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.
- James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
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)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.