Posted: 14 Dec 2011
Date Written: January 2012
The purpose of this paper is to explore how strategic tariff policy and welfare are affected by the consumer‐friendly initiative of foreign exporting firms. We define a firm that is consumer‐friendly or non‐profit‐based if it considers both its own profit and consumer surplus. This paper extends Brander and Spencer by taking the consideration of consumer‐friendly firms into an international duopoly, and within such context examining the tariff policy and welfare. The consumer‐friendly initiative that leads to trade liberalization is a ‘Win‐Win‐Win’ solution in the sense that it is not only beneficial for foreign exporting firms, but also for the government and consumers of the importing country.
Keywords: consumer‐friendly initiative, import tariff, trade liberalization
JEL Classification: D43, L13, L33
Suggested Citation: Suggested Citation
Wang, Leonard and Wang, Ya‐Chin and Zhao, Lihong, Tariff Policy and Welfare in an International Duopoly with Consumer‐Friendly Initiative (January 2012). Bulletin of Economic Research, Vol. 64, Issue 1, pp. 56-64, 2012. Available at SSRN: https://ssrn.com/abstract=1972089 or http://dx.doi.org/10.1111/j.1467-8586.2010.00382.x
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