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Abstract

This paper designs a political economy model of invasive species management that explores the effectiveness of tariffs in mitigating risks of invasion. The revenue-interests of the government together with the interests of the lobby groups competing with the imported agricultural commodity, that is believed to be the vector of invasive species, are incorporated in a Bargaining game. The government, however, also considers the impact of tariffs on long run risks of invasion and selects optimal tariffs based upon its welfare in the pre and post-invasion scenarios. This study points out that the use of tariffs for mitigating the risk of invasion may not always yield beneficial outcomes and is subject to the multiplicity of objectives that it is brought upon to serve. Along with the size of the lobby group, which is a function of the elasticity of the demand and supply curves, the weights assigned to the various components in the government welfare function too play a key role in influencing the extent to which tariffs could be an effective policy tool for invasive species management. Effectiveness of tariffs as a risk mitigation device is compromised when government's revenues in the post-invasion scenario are higher than those in the pre-invasion scenario.

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