Optimal Tariffs with Endogenous Production Location

Chao-Cheng Mai and Hong Hwang

Review of International Economics, 1997, vol. 5, issue 3, 324-32

Abstract: This paper attempts to examine how the inclusion of economic space affects trade policies and to make a comparison between optimal tariffs with endogenous location and those with exogenous location. In particular, it is shown that the output effect of a tariff change with endogenous location is greater than that with exogenous location if the production function is non-CRS. Moreover, when the production function is CRS (resp. not CRS), the optimal tariff under endogenous location is the same as (lower than) the one under exogenous location. Copyright 1997 by Blackwell Publishing Ltd.

Date: 1997
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