Tariffs as Signals of Uncompetitiveness

REVIEW OF INTERNATIONAL ECONOMICS

Posted: 4 Apr 1997

See all articles by David Collie

David Collie

Cardiff University - Cardiff Business School

Morten Hviid

University of East Anglia - Centre for Competition Policy (CCP); University of East Anglia (UEA) - Norwich Law School

Abstract

In this paper, a domestic and a foreign firm compete as Cournot duopolists in the domestic market. The foreign firm has incomplete information about the costs of the domestic firm, but the domestic government and the domestic firm are completely informed. It is shown that the domestic government can use its tariff to signal about the costs of the domestic firm. In the separating equilibrium, the domestic government signals the uncompetitiveness of the domestic firm by setting a lower tariff than is optimal under complete information.

JEL Classification: F12, F13, L13

Suggested Citation

Collie, David R. and Hviid, Morten, Tariffs as Signals of Uncompetitiveness. REVIEW OF INTERNATIONAL ECONOMICS, Available at SSRN: https://ssrn.com/abstract=4798

David R. Collie

Cardiff University - Cardiff Business School ( email )

Colum Drive
Cardiff, CF10 3EU
United Kingdom
+44 29 2087 6815 (Phone)
+44 29 2084 4419 (Fax)

HOME PAGE: http://www.collie.org.uk

Morten Hviid (Contact Author)

University of East Anglia - Centre for Competition Policy (CCP) ( email )

UEA
Norwich Research Park
Norwich, Norfolk NR47TJ
United Kingdom

University of East Anglia (UEA) - Norwich Law School ( email )

Norwich NR4 7TJ, Norfolk
United Kingdom

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
578
PlumX Metrics