{"title":"Strategic trade policy in general oligopolistic equilibrium: The case of import tariffs","authors":"Rudy Colacicco","doi":"10.1016/j.rie.2024.100959","DOIUrl":null,"url":null,"abstract":"<div><p>In a two-country model of general oligopolistic equilibrium with technologically heterogeneous sectors, I study how, in a home-market scenario, a unilateral rise in uniform cross-sector import tariffs affects wages, countrywide profits, and welfare. Firms face resource constraints and wages are simultaneously determined. Economy-wide protectionism reduces the foreign wage without affecting the domestic one. Domestic countrywide profits benefit from a small rise in uniform tariffs, whereas the foreign counterpart is damaged. Domestic welfare is unambiguously hindered. Hence, the general-equilibrium cross-sector perspective goes against the textbook version theory of the optimal tariff in partial equilibrium. Rationalization of these effects suggests a political-economy view on tariff formation in general equilibrium. Then I extend the model to segmented markets, considering uniform specific and ad valorem tariffs for bilateral and unilateral trade policies.</p></div>","PeriodicalId":46094,"journal":{"name":"Research in Economics","volume":"78 2","pages":"Article 100959"},"PeriodicalIF":1.2000,"publicationDate":"2024-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Research in Economics","FirstCategoryId":"1085","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1090944324000231","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
In a two-country model of general oligopolistic equilibrium with technologically heterogeneous sectors, I study how, in a home-market scenario, a unilateral rise in uniform cross-sector import tariffs affects wages, countrywide profits, and welfare. Firms face resource constraints and wages are simultaneously determined. Economy-wide protectionism reduces the foreign wage without affecting the domestic one. Domestic countrywide profits benefit from a small rise in uniform tariffs, whereas the foreign counterpart is damaged. Domestic welfare is unambiguously hindered. Hence, the general-equilibrium cross-sector perspective goes against the textbook version theory of the optimal tariff in partial equilibrium. Rationalization of these effects suggests a political-economy view on tariff formation in general equilibrium. Then I extend the model to segmented markets, considering uniform specific and ad valorem tariffs for bilateral and unilateral trade policies.
期刊介绍：
Established in 1947, Research in Economics is one of the oldest general-interest economics journals in the world and the main one among those based in Italy. The purpose of the journal is to select original theoretical and empirical articles that will have high impact on the debate in the social sciences; since 1947, it has published important research contributions on a wide range of topics. A summary of our editorial policy is this: the editors make a preliminary assessment of whether the results of a paper, if correct, are worth publishing. If so one of the associate editors reviews the paper: from the reviewer we expect to learn if the paper is understandable and coherent and - within reasonable bounds - the results are correct. We believe that long lags in publication and multiple demands for revision simply slow scientific progress. Our goal is to provide you a definitive answer within one month of submission. We give the editors one week to judge the overall contribution and if acceptable send your paper to an associate editor. We expect the associate editor to provide a more detailed evaluation within three weeks so that the editors can make a final decision before the month expires. In the (rare) case of a revision we allow four months and in the case of conditional acceptance we allow two months to submit the final version. In both cases we expect a cover letter explaining how you met the requirements. For conditional acceptance the editors will verify that the requirements were met. In the case of revision the original associate editor will do so. If the revision cannot be at least conditionally accepted it is rejected: there is no second revision.
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