Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry

James Brander and Barbara Spencer

Working Paper from Economics Department, Queen's University

Abstract: This paper examines the incentives for using tariffs to extract monopoly rents from imperfectly competitive foreign firms. Using a simple Stackelberg entry deterrence model, the rent-extracting policy is attractive if the foreign firm faces a threat of domestic entry. Despite transportation costs, the Stackelberg leader-follower model can lead to intra-industry trade in the same commodity.

Pages: 36
Date: 1980
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Related works:
Journal Article: Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry (1981)
Working Paper: Tariffs and the Extraction of Foreign Monopoly Rents Under Potential Entry (1980)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:414

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