Trade Policy and Public Ownership

Ngo Long and Frank Staehler ()
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Frank Staehler: Department of Economics, University of Otago
Authors registered in the RePEc Author Service: Frank Stähler

No 608, Working Papers from University of Otago, Department of Economics

Abstract: This paper discusses the influence of public ownership on trade policy instruments. We demonstrate three important invariance results. First, the degree of public ownership affects neither the level of socially optimal activities nor welfare if the government chooses optimal trade policy instruments. Second, in the case of rivalry between domestic export firms, the optimal export tax is independent of the degree of public ownership. Third, in the case of rivalry in the home market, the optimal import tariff is independent of the degree of public ownership. In this case, the optimal production subsidy decreases with public ownership if the optimal tariff is positive. For the case of Cournot rivalry in a third market, the optimal export subsidy is an increasing function of the public ownership share, while in the case of Bertrand rivalry with differentiated products, the optimal export tax is an increasing function of that parameter.

Keywords: Public ownership; trade policy (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2006-12, Revised 2006-12
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