Comparison of price caps and tariffs to counter a foreign monopoly

Karl-Martin Ehrhart, Ingmar Schlecht, Jan Schmitz and Runxi Wang

Economics Letters, 2023, vol. 227, issue C

Abstract: This paper compares import tariffs and import price caps as policy measures to regulate a foreign monopolist. We show that for any positive import tariff there exists a set of price caps each of which Pareto-dominates the tariff. This result is particularly important in the case of nontransferable utilities, as in the illustrated example of the EU-Russia gas market.

Keywords: Monopoly regulation; Price cap; Tariff; European Union; Russia; Energy policy (search for similar items in EconPapers)
JEL-codes: D42 F12 F13 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:227:y:2023:i:c:s0165176523001532

DOI: 10.1016/j.econlet.2023.111128

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