Optimal Trade Policy for Opening Markets

UCSC Dept. of Economics WP 376

Posted: 5 Sep 1997

See all articles by Dominik Egli

Dominik Egli

University of Bern - Institute of Economics

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

Date Written: June 1997

Abstract

Developing and Eastern European countries recently started opening their economies. We analyze how the opening to international trade can be accompanied by strategic trade policy if the resulting market structure is oligopolistic. We find that for reasonable parameter values, a tariff is the optimal policy tool. Furthermore, tariffs and quotas are not welfare equivalent in our model.

JEL Classification: F12, F13, O20

Suggested Citation

Egli, Dominik and Westermann, Frank, Optimal Trade Policy for Opening Markets (June 1997). UCSC Dept. of Economics WP 376. Available at SSRN: https://ssrn.com/abstract=34268

Dominik Egli

University of Bern - Institute of Economics

Gesellschaftstrasse 49
Bern, CH-3012
Switzerland

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

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