An analysis of the MFN clause under asymmetries of cost and market structure

Kamal Saggi () and Halis Yildiz

Canadian Journal of Economics, 2005, vol. 38, issue 1, 242-254

Abstract: We conduct a welfare comparison of MFN and tariff discrimination in an oligopoly model of trade between two exporting countries and one importing country. While MFN dominates tariff discrimination from a world welfare perspective when exporting countries are asymmetric with respect to either cost or market structure, such need not be the case when both types of asymmetries co-exist. In particular, when high-cost exporters are merged and the cost disadvantage of the merged unit relative to competing firms is of intermediate magnitude, tariff discrimination can be welfare preferred to MFN (even when the average tariff is actually lower under MFN).

JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (12)

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Chapter: An analysis of the MFN clause under asymmetries of cost and market structure (2018)
Journal Article: An analysis of the MFN clause under asymmetries of cost and market structure (2005)
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