Export-promoting Protection: Endogenous Monopoly and Price Disparity

Jagdish Bhagwati
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Jagdish Bhagwati: Political Science at Columbia University, N.Y. (USA),

The Pakistan Development Review, 1988, vol. 27, issue 1, 1-5

Abstract: This note shows that protection-induced export promotion can arise even in the absence of economies of scale, which have been long analysed as factors sliding an import~ubstituting industry up the scale of comparative advantage and turning it into an exporter eventually. Even with an upward-tiloping marginal-cost curve, a domestic monopolist can be protected and could then charge discriminatory prices in domestic and export markets, thus becoming an exporter whereas free trade would have destroyed the monopoly and led to imports instead.

Date: 1988
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