Tariffs, Market Conduct and Government Commitment - Policy Implications for Developing Countries

32 Pages Posted: 1 Dec 2009

See all articles by Delia Baghdasaryan

Delia Baghdasaryan

affiliation not provided to SSRN

Krešimir Žigić

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Abstract

We analyse a simple ‘tariffs cum foreign competition’ policy targeted at enhancing the competitive position of a domestic, developing country firm that competes with its developed country counterpart on the domestic market and that carries out an innovative (or imitative) effort. We evaluate this policy with respect to social welfare, type of oligopoly conduct, information requirement, time consistency and possibility of manipulative behaviour and conclude that the most robust policy setup is one in which the domestic government is unable to pre-commit to the level of its policy. We also study how the unit cost heterogeneity of the domestic firm affects trade protection.

Suggested Citation

Baghdasaryan, Delia and Žigić, Krešimir, Tariffs, Market Conduct and Government Commitment - Policy Implications for Developing Countries. Economics of Transition, Vol. 18, No. 1, pp. 91-122, January 2010. Available at SSRN: https://ssrn.com/abstract=1514077 or http://dx.doi.org/10.1111/j.1468-0351.2009.00372.x

Delia Baghdasaryan (Contact Author)

affiliation not provided to SSRN

No Address Available

Krešimir Žigić

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic

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