Optimal Tariffs and Subsidies and Changes in Markets Structure

12 Pages Posted: 20 Feb 2001

See all articles by Frank Westermann

Frank Westermann

University of Osnabrueck - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Dominik Egli

University of Bern - Institute of Economics

Date Written: November 2000

Abstract

We present a unified treatment of optimal trade policy for a small country. The well-known results for duopoly and competitive markets emerge as benchmark cases of our model. In addition, we show that changes in market structure have non-monotonic effects on optimal tariffs. Our results suggest that the recent reduction of tariffs in Eastern Europe is consistent with welfare maximizing trade policy in response to the substantial changes in the market structure of these countries.

Keywords: Market structure, strategic trade policy, rent shifting

JEL Classification: F1

Suggested Citation

Westermann, Frank and Egli, Dominik, Optimal Tariffs and Subsidies and Changes in Markets Structure (November 2000). CESifo Working Paper Series No. 369. Available at SSRN: https://ssrn.com/abstract=260929

Frank Westermann (Contact Author)

University of Osnabrueck - Department of Economics ( email )

Rolandstr. 8
Osnabrueck, D-49069
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

Dominik Egli

University of Bern - Institute of Economics

Gesellschaftstrasse 49
Bern, CH-3012
Switzerland

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