Comparison of Price Caps and Tariffs to Counter a Foreign Monopoly
10 Pages Posted: 22 Feb 2023
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: 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
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