Oligopoly and the Ranking of Optimal and Maximum Revenue Tariffs

Hong Hwang

Working Paper from Economics Department, Queen's University

Abstract: This paper examines whether national optimal tariffs exceed maximum revenue tariffs and whether free trade is superior to tariff protection when markets are oligopolistic. Contrary to the results for competitive markets, national optimal tariffs may exceed maximum revenue tariffs, more so the higher the degree of substitutability between the imported and domestically produced good. Free trade is better than tariff protection when the two goods are independent or complementary, but a positive tariff may improve world welfare if the two goods are substitutes.

Pages: 32
Date: 1983
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:538

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