Comparison of Price Caps and Tariffs to Counter a Foreign Monopoly

10 Pages Posted: 22 Feb 2023

See all articles by Karl-Martin Ehrhart

Karl-Martin Ehrhart

Karlsruhe Institute of Technology (KIT)

Ingmar Schlecht

affiliation not provided to SSRN

Jan Schmitz

affiliation not provided to SSRN

Runxi Wang

Karlsruhe Institute of Technology

Abstract

This paper compares import tariffs and import price caps as policy measures to regulate a foreign monopolist. We show that for any positive import tariff there exists a set of price caps each of which Pareto-dominates the given tariff. This result is particularly important in the case of nontransferable utilities, as in the illustrated example of the EU-Russia gas market.

Keywords: monopoly regulation, price cap, tariff, European Union, Russia, Energy policy

Suggested Citation

Ehrhart, Karl-Martin and Schlecht, Ingmar and Schmitz, Jan and Wang, Runxi, Comparison of Price Caps and Tariffs to Counter a Foreign Monopoly. Available at SSRN: https://ssrn.com/abstract=4366575 or http://dx.doi.org/10.2139/ssrn.4366575

Karl-Martin Ehrhart

Karlsruhe Institute of Technology (KIT) ( email )

Kaiserstraße 12
Karlsruhe, Baden Württemberg 76131
Germany

Ingmar Schlecht

affiliation not provided to SSRN ( email )

No Address Available

Jan Schmitz

affiliation not provided to SSRN

Runxi Wang (Contact Author)

Karlsruhe Institute of Technology

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