Welfare- and Revenue-Enhancing Tariff and Tax Reform under Imperfect Competition

Takumi Naito () and Kenzo Abe

Journal of Public Economic Theory, 2008, vol. 10, issue 6, pages 1085-1094

Abstract: We examine welfare and revenue effects of tariff and tax reform in a country importing final and intermediate goods, both of which are produced under imperfect competition. We consider two reform strategies. First, lower the sum of a consumption tax and a tariff on the intermediate good, and leave the sum of the consumption tax and a tariff on the final good unchanged. Second, lower the former and change the latter to leave government revenue unchanged. We specify conditions under which each reform strategy raises welfare without decreasing government revenue. Copyright © 2008 Wiley Periodicals, Inc..

Date: 2008

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