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Optimal Tariffs with Endogenous Production Location
Author(s) -
Mai ChaoCheng,
Hwang Hong
Publication year - 1997
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/1467-9396.00060
Subject(s) - tariff , production (economics) , economics , endogeny , function (biology) , production function , microeconomics , space (punctuation) , endogenous growth theory , international trade , international economics , market economy , computer science , microbiology and biotechnology , medicine , human capital , biology , operating system
This paper attempts to examine how the inclusion of economic space affects trade policies and to make a comparison between optimal tariffs with endogenous location and those with exogenous location. In particular, it is shown that the output effect of a tariff change with endogenous location is greater than that with exogenous location if the production function is non‐CRS. Moreover, when the production function is CRS (resp. not CRS), the optimal tariff under endogenous location is the same as (lower than) the one under exogenous location.