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Optimal Tariffs and Subsidies and Changes in Market Structure
Author(s) -
Egli Dominik,
Westermann Frank
Publication year - 2004
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/j.1467-9361.2004.00241.x
Subject(s) - economics , duopoly , subsidy , market structure , welfare , benchmark (surveying) , commercial policy , international economics , export subsidy , microeconomics , general equilibrium theory , market economy , geodesy , geography
The paper presents a unified treatment of optimal trade policy for a small country. The well‐known results for duopoly and competitive markets emerge as benchmark cases of the authors’ model. In addition, it is shown that changes in market structure have nonmonotonic effects on optimal tariffs. The results suggest that the recent reduction of tariffs in eastern Europe is consistent with welfare‐maximizing trade policy in response to the substantial changes in the market structure of these countries.