PRODUCT DIFFERENTIATION – AN ALTERNATIVE TO CVDS: A COMMENT

Witness Simbanegavi

South African Journal of Economics, 2010, vol. 78, issue 2, 219-223

Abstract: This note is a comment to Wang (2008)'s contribution in the SAJE (Vol. 76 (3)). We show that when firms' strategic variables are prices and not quantities, Wang's findings are largely reversed. In particular, the foreign government levies an export tax on its producer as opposed to an export subsidy. Further, both the “optimal tax” and the domestic welfare are non‐monotonic in the degree of product differentiation.

Date: 2010
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https://doi.org/10.1111/j.1813-6982.2010.01243.x

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