Tariffs and privatization policy in a bilateral trade with corporate social responsibility

Lili Xu () and Sang-Ho Lee ()

Economic Modelling, 2019, vol. 80, issue C, 339-351

Abstract: Corporate social responsibility (CSR) has become a global business strategy and thus it provides significant welfare implications for designing optimal policies. This paper investigates the impact of CSR on policy interaction between tariffs and privatization in an international bilateral trade model. We find that CSR is closely related to the government's policy decisions on tariffs. In particular, we find that the strategic tariff for increasing domestic welfare is always higher (lower) than the efficient tariff for improving global welfare when the degree of CSR is low (high). We also show that a privatization policy raises tariff and worsens (improves) domestic welfare when the degree of CSR is low (high). Finally, we demonstrate that both countries choose a nationalization policy even though the privatization policy is globally optimal when the degree of CSR is high.

Keywords: Tariffs; Privatization policy; Corporate social responsibility; Bilateral trade (search for similar items in EconPapers)
JEL-codes: D43 F12 F31 L13 L33 (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (39)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:80:y:2019:i:c:p:339-351

DOI: 10.1016/j.econmod.2018.11.020

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