Perfectly Discriminatory Policy towards International Capital Movements in a Dynamic World

Richard Manning () and Koon-Lam Shea

International Economic Review, 1989, vol. 30, issue 2, 329-48

Abstract: A large country is able to affect its trading partners' accumulation of capital, and so it can alter future market conditions. Capital movements can be regulated by perfectly discriminatory policy to maximize the welfare of the large country by exploiting this link. This policy implies that resource allocation is efficient along the optimal path. In contrast to the use of perfectly discriminatory policy in a static world, it is not always optimal for the large country to fully exploit its market power. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1989
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