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Monopoly and Trade Policy

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  • Carsten Kowalczyk

Abstract

This paper presents a general equilibrium technique for the problem of ranking policies of a nation that trades with a foreign monopoly firm by presenting a generalization of the offer curve. The paper demonstrates the existence of a partial welfare ranking between ad valorem rates and specific rates, and it shows that a minimum import requirement welfare dominates other quantitative policies. The paper proves that a recent policy, the voluntary import expansion, has strongly adverse consequences: when trading with a foreign monopoly firm a nation implementing such a policy will achieve only its autarky level of welfare.

Suggested Citation

  • Carsten Kowalczyk, 1990. "Monopoly and Trade Policy," NBER Working Papers 3475, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3475
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    1. de Meza, David, 1979. "Commercial Policy Towards Multinational Monopolies-Reservations on Katrak," Oxford Economic Papers, Oxford University Press, vol. 31(2), pages 334-337, July.
    2. Brander, James A. & Spencer, Barbara J., 1984. "Trade warfare: Tariffs and cartels," Journal of International Economics, Elsevier, vol. 16(3-4), pages 227-242, May.
    3. Svedberg, Peter, 1979. "Optimal Tariff Policy on Imports from Multinationals," The Economic Record, The Economic Society of Australia, vol. 55(148), pages 64-67, March.
    4. Dinopoulos, Elias & Kreinin, Mordechai E, 1990. "An Analysis of Import Expansion Policies," Economic Inquiry, Western Economic Association International, vol. 28(1), pages 99-108, January.
    5. Takacs, Wendy E., 1978. "The nonequivalence of tariffs, import quotas, and voluntary export restraints," Journal of International Economics, Elsevier, vol. 8(4), pages 565-573, November.
    6. Rodriguez, Carlos Alfredo, 1974. "The non-equivalence of tariffs and quotas under retaliation," Journal of International Economics, Elsevier, vol. 4(3), pages 295-298, August.
    7. T. de Scitovszky, 1942. "A Reconsideration of the Theory of Tariffs," Review of Economic Studies, Oxford University Press, vol. 9(2), pages 89-110.
    8. D. J. Horwell, 1966. "Optimum Tariffs and Tariff Policy," Review of Economic Studies, Oxford University Press, vol. 33(2), pages 147-158.
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