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PRODUCT DIFFERENTIATION – AN ALTERNATIVE TO CVDS: A COMMENT
Author(s) -
Simbanegavi Witness
Publication year - 2010
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2010.01243.x
Subject(s) - subsidy , product differentiation , economics , product (mathematics) , welfare , government (linguistics) , microeconomics , public economics , market economy , mathematics , linguistics , philosophy , geometry
This note is a comment to Wang (2008)'s contribution in the SAJE (Vol. 76 (3)). We show that when firms' strategic variables are prices and not quantities, Wang's findings are largely reversed. In particular, the foreign government levies an export tax on its producer as opposed to an export subsidy. Further, both the “optimal tax” and the domestic welfare are non‐monotonic in the degree of product differentiation.