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Welfare effects of tariffs and investment taxes

Author

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  • J. Peter Neary

Abstract

This paper derives first- and second-best levels of optimal tariffs and taxes on internationally mobile capital in a general model of an open economy. When world prices are fixed (so that non-intervention is optimal), iso-welfare contours in tax-tariff space are shown to be ellipses centred around the origin which are tilted upwards if and only if importables are relatively capital-intensive. Under plausible assumptions, the same is true in the large open economy case, except that the contours are now ellipses centred around the non-zero first-best intervention point.

Suggested Citation

  • J. Peter Neary, 1988. "Welfare effects of tariffs and investment taxes," Working Papers 198801, School of Economics, University College Dublin.
  • Handle: RePEc:ucn:wpaper:198801
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    File URL: http://hdl.handle.net/10197/1448
    File Function: First version, 1988
    Download Restriction: no

    Citations

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    Cited by:

    1. Chi-Chur Chao & Chong Yip, 2001. "Non-traded goods and optimal trade policy in a cash-in-advance economy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(1), pages 23-37.
    2. Kreickemeier, Udo & Raimondos-Møller, Pascalis, 2006. "Concertina Reforms with International Capital Mobility," Working Papers 05-2006, Copenhagen Business School, Department of Economics.
    3. J. Neary, 2006. "International Trade and the Environment: Theoretical and Policy Linkages," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(1), pages 95-118, January.
    4. Anil Lal, 2001. "Goods and factors liberalization under increasing returns to scale," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(2), pages 115-131.

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