Maximum-Revenue Tariffs versus Free Trade
No E2018/8, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section
Welfare with the maximum-revenue tariff is compared to free-trade welfare under perfect competition in the case of a large country able to affect its terms of trade; under Cournot duopoly with differentiated products; and under Bertrand duopoly with differentiated products. Under perfect competition, assuming linear demand and supply, welfare with the maximum-revenue tariff will be higher than free-trade welfare if the country has sufficient market power. Under Cournot duopoly and Bertrand duopoly, assuming linear demands and constant marginal costs, welfare with the maximum-revenue tariff is always higher than free-trade welfare.
Keywords: Maximum-Revenue Tariff; Free Trade; Perfect Competition; Cournot Oligopoly; Bertrand Oligopoly (search for similar items in EconPapers)
JEL-codes: F12 F13 F13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-int and nep-ore
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