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Tariff Protection in a Price Leadership Model

John Karikari

Working Paper from Economics Department, Queen's University

Abstract: It is common in most markets that a firm in the industry is regarded as the industry leader. Employing a price leadership model which considers dominant firm and cartel cases, and asymmetric firms, we analyze the effects of tariff protection on the price level, home production, and imports. The decrease in imports and increase in home production are lower (higher) if the importer is the price-setter (price-taker). There is "pricing-up-to-the-tariff" only if the home producer(s) set the price.

Pages: 29 pages
Date: 1984
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