Tariffs Versus Quotas in the Presence of Imperfect Competition and Cross-Border Externalities

14 Pages Posted: 9 Jun 2004

See all articles by Taiji Furusawa

Taiji Furusawa

University of Tokyo

Keisaku Higashida

Fukushima University - Faculty of Economics

Jota Ishikawa

Hitotsubashi University-Faculty of Economics

Abstract

We consider trade policies intended to affect the production of a foreign monopolist that generates negative externalities. We derive the optimal tariff and optimal import quota and examine which policy measure should be used to maximize domestic welfare. We find that if the domestic government does not have full information on the foreign firm's production method and if cross-border externalities exist, import quotas are in some cases preferable to tariffs. Otherwise, however, tariffs are preferable to quotas.

JEL Classification: F13, F18

Suggested Citation

Furusawa, Taiji and Higashida, Keisaku and Ishikawa, Jota, Tariffs Versus Quotas in the Presence of Imperfect Competition and Cross-Border Externalities. Canadian Journal of Economics, Vol. 37, No. 2, pp. 445-458, May 2004. Available at SSRN: https://ssrn.com/abstract=531750

Keisaku Higashida

Fukushima University - Faculty of Economics ( email )

1 Kanayagawa
Fukushima 960-1296
Japan
+81-24-548-8396 (Phone)

Jota Ishikawa

Hitotsubashi University-Faculty of Economics ( email )

2-1 Naka, Kunitachi
Tokyo, Tokyo 186-8601
Japan
+81425808794 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
18
Abstract Views
900
PlumX Metrics