Open AccessThe Evaluation of Maximum Tariffs in an Emerging Economy: The Nigerian Case
Author(s) -
Nathan Pelesai Audu,
ThankGod Oyinpreye Apere
Publication year - 2012
Publication title -
international journal of human resource studies
Language(s) - English
Resource type - Journals
ISSN - 2162-3058
DOI - 10.5296/ijhrs.v2i3.2472
Subject(s) - stackelberg competition , cournot competition , tariff , oligopoly , economics , government revenue , welfare , revenue , microeconomics , competitor analysis , small open economy , competition (biology) , government (linguistics) , international economics , market economy , monetary economics , finance , ecology , linguistics , philosophy , management , exchange rate , biology
Using the Cournot and Stackelberg theories of oligopolistic competition, the paper re-evaluate the importance of tariff ranking issue under a mixed oligopoly model with foreign competitors and asymmetric costs. We demonstrated that under Cournot theory, when the size of domestic private and foreign private firms becomes more unequally distributed, maximum–welfare tariff will exceed maximum–revenue tariff. The study also revealed that under Stackelberg theory, when the domestic government protects its domestic sector, it will levy higher maximum–welfare tariffs versus maximum–revenue tariffs. These two positions notwithstanding, when the Nigerian government decides to open its doors more for foreign competitors, it will need to levy higher maximum-revenue tariffs versus maximum–welfare tariffs. The findings of this paper remain valid whether the domestic public firm acts as a leader or a follower in the market.