Domestic Input Policies in Free Trade Areas with National Asymmetries

Yann Duval

Eastern Economic Journal, 2002, vol. 28, issue 2, 241-253

Abstract: This paper combines some of the most realistic components of the competitive and strategic trade literature to examine both socially and individually optimal domestic input policies in free trade areas (FTAs). When asymmetries in the number of firms, in the number of consumers, or in production costs exist across countries, tax harmonization is not optimal and input taxes depend on the shape of the production process and the degree of imperfect competition. The presence of input tax asymmetries in a customs union or FTA does not constitute evidence of strategic behavior at the national level.

Keywords: Free Trade; Strategic Trade; Trade (search for similar items in EconPapers)
JEL-codes: F13 F14 F43 (search for similar items in EconPapers)
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:28:y:2002:i:2:p:241-253

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Eastern Economic Journal is currently edited by Cynthia A. Bansak, St. Lawrence University and Allan A. Zebedee, Clarkson University

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