Tariffs with dynamic supply response

Larry Karp

No 6122, CUDARE Working Papers from University of California, Berkeley, Department of Agricultural and Resource Economics

Abstract: This paper studies the optimal tariff in a dynamic framework. The effects of the supplier's rationality and of the type of strategy available to the importer are discussed. With rational sellers, the optimal tariff is dynamically inconsistent; the consistent tariff is extremely myopic and may be worse than free trade for the importer. The paper concentrates on the case in which the traded good is a reproducible commodity. This is compared to the situation in which the traded good is a nonrenewable resource. The plausibility of the consistent equilibrium, in the absence of binding commitments, is discussed.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 36
Date: 1985
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Working Paper: Tariffs with Dynamic Supply Response (1985)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ucbecw:6122

DOI: 10.22004/ag.econ.6122

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