Tariffs with dynamic supply response

This paper studies the optimal tariff in a dynamic framework. The effects of the supplier's rationality and of the type of strategy available to the importer are discussed. With rational sellers, the optimal tariff is dynamically inconsistent; the consistent tariff is extremely myopic and may be worse than free trade for the importer. The paper concentrates on the case in which the traded good is a reproducible commodity. This is compared to the situation in which the traded good is a nonrenewable resource. The plausibility of the consistent equilibrium, in the absence of binding commitments, is discussed.


Issue Date:
1985
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/6122
Total Pages:
36
Series Statement:
CUDARE Working Paper
353




 Record created 2017-04-01, last modified 2017-08-23

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