Protection for Sale, Monopolistic Competition and Variable Markups

Enrico Marvasi

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: We extend the basic model of trade protection with special interest groups developed in Grossman and Helpman (1994) to include monopolistic competition with variable markups. We find the following results: (i) for sectors organized into lobbies the endogenous import tariff is always positive and inversely related to the degree of import penetration; (ii) for unorganized sectors the endogenous import policy may be a tariff or a subsidy, depending on the policy implemented by the partner country; (iii) the endogenous export policy consists in an export tax for unorganized sectors and in a subsidy for organized sector provided that goods are suciently differentiated.

Keywords: Endogenous Trade Policy; Protection for Sale; Monopolistic Competition; Variable Markups. (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2013
New Economics Papers: this item is included in nep-int
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Working Paper: Protection for Sale, Monopolistic Competition and Variable Markups (2013)
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