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Income distribution and the contractionary effect of protection: A theoretical analysis

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  • Marjit, Sugata
  • Kabiraj, Tarun

Abstract

In terms of a simple model we show that removal of tariff from a competing foreign brand is likely to expand the size of the domestic industry when income disparities exist. A tariff increases profits of the local monopolist but is capable of cutting down the size of the local industry. After providing the general theoretical condition, we construct an example (from a class of examples) where such an outcome holds in equilibrium.

Suggested Citation

  • Marjit, Sugata & Kabiraj, Tarun, 1992. "Income distribution and the contractionary effect of protection: A theoretical analysis," Discussion Papers, Series II 182, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:182
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    Cited by:

    1. Hamid Beladi & Sugata Marjit & Xinpeng Xu, 2011. "Protection, Involuntary Self‐Employment And Welfare," The Japanese Economic Review, Japanese Economic Association, vol. 62(2), pages 184-195, June.
    2. Acharyya, Rajat, 2005. "Quality discrimination among income constrained consumers," Economics Letters, Elsevier, vol. 86(2), pages 245-251, February.
    3. Soma Roy, 2011. "Income Distribution, Spillover Effects And Choice Of Product Quality," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 36(2), pages 61-86, June.
    4. Hamid Beladi & Sugata Marjit & Reza Oladi, 2018. "Does protectionism harm unskilled workers?," Economics and Politics, Wiley Blackwell, vol. 30(3), pages 444-450, November.

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