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Tariffs, horizontal regulatory standards and protection against foreign competition

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journal contribution
posted on 21.05.2014 by Huw Edwards
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 Gruyter

Version

AM (Accepted Manuscript)

Publication date

2009

Notes

This article was published in the Global Economy Journal [© De Gruyter] and the definitive version is available at: http://dx.doi.org/10.2202/1524-5861.1456

eISSN

1524-5861

Language

en

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