DOMESTIC COMPETITION POLICY AND TARIFF POLICY COMPARED*

Rika Takahashi

The Japanese Economic Review, 2005, vol. 56, issue 2, 210-222

Abstract: M. Yano and F. Dei have demonstrated that, by controlling the degree of competition in a non‐tradables market (competition policy), a country can influence the terms of trade so as to increase its welfare, relative to free trade. Using their model, this study compares the extent of this effect with that of a tariff policy. It demonstrates that a competition policy can achieve a higher utility than a tariff policy if tariff rates are at levels currently tolerated in the real world. This demonstrates that domestic competition policy may play an important role as a substitute for tariff policy.

Date: 2005
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