Strategic Trade Policy in General Oligopolistic Equilibrium

Rudy Colacicco

No 126, FIW Working Paper series from FIW

Abstract: In a two-country general oligopolistic equilibrium model, I study how cross-sector strategic trade policy affects wages, countrywide profits, and welfare. Firms face resource constraints and wages are simultaneously determined. Relative to free trade, cross-sector protectionism generates a reduction in the foreign wage without affecting the domestic wage. Domestic countrywide profits benefit from small import tariffs, whereas the foreign counterpart is hit, but when sectors share the same technology. Domestic welfare is unambiguously penalized. Hence, the general-equilibrium cross-sector perspective goes against the textbook version theory of the optimal tariff in partial equilibrium. Rationalization of these effects suggests a political-economy view on tariff formation in general equilibrium.

Keywords: Cournot Competition, Home Market, Import Tariff, Income Distribution; Welfare (search for similar items in EconPapers)
JEL-codes: D43 D51 F12 F13 L11 L13 (search for similar items in EconPapers)
Pages: 34
Date: 2013-08
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.fiw.ac.at/fileadmin/Documents/Publikati ... /N_126-Colacicco.pdf full text
none

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsr:wpaper:y:2013:i:126

Ordering information: This working paper can be ordered from
FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna

Access Statistics for this paper

More papers in FIW Working Paper series from FIW
Bibliographic data for series maintained by ().