Customs Union, Tariff Reform and Trade in Differentiated Products
Anthony Venables ()
No 38, CEPR Discussion Papers from C.E.P.R. Discussion Papers
The paper analyses tax and tariff policy for trade between economies which each contain a monopolistically competitive industry producing differentiated products. The consequences of tax changes by a single country are examined, and the general desirability of taxing imports more heavily than domestically produced goods is established. Customs union theory is analysed by studying coordinated tax changes by a group of countries; circumstances under which customs union formation and enlargement will benefit members are found. Game theoretic techniques are used to investigate which countries will coalesce into a customs union.
Keywords: Customs Union; Differentiated Products; Monopolistic Competition; Tariffs; Tax Policy (search for similar items in EconPapers)
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