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Export Taxes under Bertrand Duopoly

Roger Clarke and David Collie

No E2006/15, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: This article analyses export taxes in a Bertrand duopoly with product differentiation, where a home and a foreign firm both export to a third-country market. It is shown that the maximum-revenue export tax always exceeds the optimum-welfare export tax. In a Nash equilibrium in export taxes, the country with the low cost firm imposes the largest export tax. The results under Bertrand duopoly are compared with those under Cournot duopoly. It is shown that the absolute value of the export subsidy or tax under Cournot duopoly exceeds the export tax under Bertrand duopoly.

Keywords: Trade Policy; Imperfect Competition; Oligopoly (search for similar items in EconPapers)
JEL-codes: F12 F13 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ind, nep-int and nep-mic
Date: 2006-02
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Published in Economics Bulletin , Vol. 6, No. 6, pp. 1-8, 2006.

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