A tariff on a productive factor and import competing supply

Henry Thompson

The Journal of International Trade & Economic Development, 2016, vol. 25, issue 1, 71-79

Abstract: A tariff on an imported factor of production such as energy or capital reduces the import as well as output in the general equilibrium of a small open economy. The present paper shows real income may rise, however, due to an increase in the import competing quantity supplied. The present competitive economy produces a single exported output with two factors of production, one purely domestic. The import competing price elasticity, shares of income and output, and factor substitution determine general equilibrium adjustments to a tariff on the imported factor.

Date: 2016
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DOI: 10.1080/09638199.2015.1023334

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