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Tariffs, horizontal regulatory standards and protection against foreign competition
This paper focuses on a regulator's choice between setting a pure, horizontal technical barrier to trade (HTBT) or a tariff in a linear, Cournot duopoly, where a foreign firm competes with a local rival. Where a country is free to impose a tariff, it will not impose a HTBT. Only under a limited set of circumstances will the profit-shifting effect be sufficient to lead to total exclusion of the foreign firm: in other conditions, the country will set a tariff yielding some revenue. By contrast, if tariffs are constrained by international agreement, then the importing country will set an HTBT to exclude the foreign firm if and only if tariffs are reduced below a threshold level. Trade liberalisation agreements which only cover tariffs can reduce, rather than increase global welfare.
History
School
- Business and Economics
Department
- Business
Citation
EDWARDS, T.H., 2009. Tariffs, horizontal regulatory standards and protection against foreign competition. Global Economy Journal, 9 (2), DOI: 10.2202/1524-5861.1456, June 2009.Publisher
© De GruyterVersion
- AM (Accepted Manuscript)
Publication date
2009Notes
This article was published in the Global Economy Journal [© De Gruyter] and the definitive version is available at: http://dx.doi.org/10.2202/1524-5861.1456eISSN
1524-5861Publisher version
Language
- en