Tariffs, market conduct and government commitment: policy implications for developing countries

0341815 - NHU-C 2011 RIV GB eng J - Journal Article
Baghdasaryan, D. - Žigić, Krešimir
Tariffs, market conduct and government commitment: policy implications for developing countries.
Economics of Transition. Roč. 18, č. 1 (2010), s. 91-122. ISSN 0967-0750. E-ISSN 1468-0351
R&D Projects: GA MŠMT LC542
Institutional research plan: CEZ:MSM0021620846
Keywords : optimal tariff protection * innovative (imitative) effort * government non-commitment regime * unit cost heterogeneity
Subject RIV: AH - Economics
Impact factor: 0.536, year: 2010

We analyse a simple 'tariffs cum foreign competition' policy targeted at enhancing the competitive position of a domestic, developing country firm that competes with its developed country counterpart on the domestic market and that carries out an innovative (or imitative) effort. We evaluate this policy with respect to social welfare, type of oligopoly conduct, information requirement, time consistency and possibility of manipulative behaviour and conclude that the most robust policy setup is one in which the domestic government is unable to pre-commit to the level of its policy. We also study how the unit cost heterogeneity of the domestic firm affects trade protection.
Permanent Link: http://hdl.handle.net/11104/0184688