Partial Replacement of Protective Tariffs by Production Subsidies and Welfare

9 Pages Posted: 9 Sep 2015

See all articles by Yoshitomo Ogawa

Yoshitomo Ogawa

Kinki University

Yoshiyasu Ono

Osaka University - Institute of Social and Economic Research (ISER)

Date Written: September 2015

Abstract

Using a two‐country framework, this paper examines the welfare effect of partially replacing a tariff with a production subsidy. It considers some plausible situations for industry protection, including where the initial tariff is higher than the optimal tariff, where a certain output of the protected commodity must be maintained, and where domestic production of the sector yields some externalities. In these cases it is shown that the partial replacement benefits the country. Properties of the optimal replacement are also explored.

Suggested Citation

Ogawa, Yoshitomo and Ono, Yoshiyasu, Partial Replacement of Protective Tariffs by Production Subsidies and Welfare (September 2015). Economic Record, Vol. 91, Issue 294, pp. 300-308, 2015. Available at SSRN: https://ssrn.com/abstract=2657830 or http://dx.doi.org/10.1111/1475-4932.12192

Yoshitomo Ogawa (Contact Author)

Kinki University ( email )

Higashi-Osaka City, Osaka 577-8502
Japan

Yoshiyasu Ono

Osaka University - Institute of Social and Economic Research (ISER) ( email )

6-1 Mihogaoka
Ibaraki, Osaka 567-0047
Japan

Register to save articles to
your library

Register

Paper statistics

Downloads
0
Abstract Views
81
PlumX Metrics