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Trade Policy and Public Ownership

Author

Listed:
  • Ngo Van Long

    () (Department of Economics, McGill University, Montreal)

  • Frank Staehler

    () (Department of Economics, University of Otago)

Abstract

This paper discusses the influence of public ownership on trade policy instruments. We demonstrate three important invariance results. First, the degree of public ownership affects neither the level of socially optimal activities nor welfare if the government chooses optimal trade policy instruments. Second, in the case of rivalry between domestic export firms, the optimal export tax is independent of the degree of public ownership. Third, in the case of rivalry in the home market, the optimal import tariff is independent of the degree of public ownership. In this case, the optimal production subsidy decreases with public ownership if the optimal tariff is positive. For the case of Cournot rivalry in a third market, the optimal export subsidy is an increasing function of the public ownership share, while in the case of Bertrand rivalry with differentiated products, the optimal export tax is an increasing function of that parameter.

Suggested Citation

  • Ngo Van Long & Frank Staehler, 2006. "Trade Policy and Public Ownership," Working Papers 0608, University of Otago, Department of Economics, revised Dec 2006.
  • Handle: RePEc:otg:wpaper:0608
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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0608.pdf
    File Function: First version, 2006
    Download Restriction: no

    More about this item

    Keywords

    Public ownership; trade policy;

    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

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