Protection for Sale with Price Interactions andIncomplete Pass-Through

Barbara Annicchiarico () and Enrico Marvasi

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

Abstract: We extend the protection for sale model of Grossman and Helpman (1994) by introducing a general model of monopolistic competition with variable markups and incomplete pass-through. We show that the structure of protection emerging in the political equilibrium not only depends on the weight attached by the government to consumer welfare when making its policy decision, but also on the degree of market power of firms and on the terms-of-trade variations due to the degree of pass-through. Our results highlight the importance of preferences in shaping the structure of protection and are consistent with the occurring of protectionism also in unorganized industries.

Keywords: Protection for Sale; Monopolistic Competition; Incomplete Pass-Through; Endogenous Markups. (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2019
New Economics Papers: this item is included in nep-com, nep-int and nep-pol
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Related works:
Working Paper: Protection for Sale with Price Interactions and Incomplete Pass-Through (2018)
Working Paper: Protection for Sale with Price Interactions and Incomplete Pass-Through (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:frz:wpaper:wp2019_06.rdf

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