Lobbying, corruption and “optimal” tariff

Shih-shen Chen (), Chu-Chuan Hsu () and Chin-shu Huang ()

International Review of Economics, 2013, vol. 60, issue 4, 375-386

Abstract: This paper explores how a government officer enacts “optimum” import policy when confronting lobbies on trade policies from both domestic and foreign firms in a transition economy. Two results are found: firstly, if the inducement from the foreign firm on the government officer works, then the optimum tariff is negative, that is, import subsidy. However, this subsidy will turn to a positive tariff rate with the increasing lobbying inducement from domestic firms. Secondly, zero tariff duty is not an optimum choice under most circumstances. Besides, an asymmetric result is that when these two firms’ marginal costs are different, the optimum policy is to levy an import tariff on the one whose marginal cost is relatively small, while the other firm will get an import subsidy. Copyright Springer-Verlag 2013

Keywords: Lobbying; Corruption; Tariff; F12; F13 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/s12232-012-0164-y

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