uniform versus discriminatory tariffs when will export taxes be used 1 introductionthis paper attempts to combine two branches of strategic trade policy literature together by analyzing choices of export subsidies and import taxes in a unified framework it aims to provide a better insight into the interactions among the governments of two exporting countries and an importing country in a seminal paper brander and spencer 1985 show that under cournot competition a domestic export subsidy allows a domestic firm to gain at the expense of a rival firm in another exporting country their paper initiated a great deal of interest in the proper use of export subsidies 1 it is noted that in the brander spencer and related models the government of the third country which imports the goods from the two countries is assumed to be inactive on the other hand there is a separate literature that analyzes the optimal policies for an importing country which buys a homogeneous product from two countries with rival firms for example gatsios 1990 and hwang and mai 1991 show that the optimal policy for the importing country is to impose a higher tariff on the product from the more cost efficient exporter choi 1995 and horiba and tsutsui 2000 extend the literature by comparing the impacts of discriminatory and uniform tariffs both of these two papers examine the choice of the two tariff regimes by the importing country and investigate how a regime may affect the level of technologies chosen by the exporting firms all these papers focus on the policies of the importing country while assuming that the exporting governments are inactive in this paper we consider a model similar to those examined by all these papers two exporting countries and one importing country with one firm in each of the exporting countries competing in a cournot way what makes the present paper different from others is that we allow all three governments to be active in choosing the optimal values of their policies an export subsidy tax for each exporting country and a tariff subsidy for the importing country we also analyze the impacts of two different tariff regimes a uniform tariff regime as required by the most favored nations mfn clause of the gatt wto and a discriminatory tariff regime choosing between these two types of tariff regimes is an interesting issue in the present framework because it not only determines the welfare of the importing country but also affects the export subsidies chosen by the exporting countries the present more extensive model and analysis as compared with what exists in the literature can be used to answer several questions if each exporting country is aware of the tariffs to be imposed by the importing country on the products from itself and its rival does it still have an incentive to impose an export subsidy as brander and spencer proposed does such an export subsidy depend on whether the importing country is using discriminatory tariffs or a uniform tariff how might the noncooperative equilibrium in terms of export subsidies be affected by the tariff regimes chosen by the importing country what is the optimal tariff of the importing country in response to the export subsidies chosen by the exporting countries how would the importing country choose between the two tariff regimes how would the welfare of these countries be affected by the policies and the policy regimes some of the results obtained in the present paper can be linked to the existing results under a uniform tariff regime as required by the mfn clause the brander spencer argument kicks in and each country has the right incentive to promote the export of its own firm with an export subsidy if the importing country is using discriminatory tariffs the argument in the papers by gatsios 1990 hwang and mai 1991 choi 1995 and horiba and tsutsui 2000 is applicable an importing country tends to impose a higher tariff on the more cost efficient exporter

optimum discriminatory tariffs under oligopolistic competition this paper attempts to present a simple cournot model to determine the optimal discriminatory tariff rates when the international market is a homogeneous heterogeneous product market in the model there are two foreign firms located in two different countries competing for sales in a local market when the firms sell a homogeneous product and the home country can impose differential tariffs on imports from different countries then the tariff on the low cost producer should be hgher in particular with constant marginal costs the tariff difference should equal half the cost difference on the other hand if the firms sell differentiated products with symmetric linear demands and technologies then the weaker the degree of product differentiation the greater is the tariff difference compared with the cost difference

domestic export subsidy and foreign welfare abstract in this paper we present an analysis based on imperfect competition to examine the conditions under which an export subsidy of the domestic country will not only increase its own welfare but also raise the welfare of the importing country and hence the world as a whole under these conditions it is then suggested that relaxation of gatt restrictions on export subsidies might be feasible to some extent

industry structure antitrust and tariffs this paper offers an analysis of the relationship between antitrust foreign trade and tariff policy it is shown that while in the static situation a tariff can be interpreted as a barrier to entry tc the foreign firm in the repeated game framework a tariff has an international antitrust property i e it can break up a cartel consisting of international firms the magnitude of the antitrust tariff will depend on factors such as the degree of cost advantage and product differentiation furthermore the antitrust tariff can paradoxically raise import share and reduce the home firm s output

an analysis of the mfn clause under asymmetries of cost and market structure we conduct a welfare comparison of mfn and tariff discrimination in an oligopoly model of trade between two exporting countries and one importing country while mfn dominates tariff discrimination from a world welfare perspective when exporting countries are asymmetric with respect to either cost or market structure such need not be the case when both types of asymmetries co exist in particular when high cost exporters are merged and the cost disadvantage of the merged unit relative to competing firms is of intermediate magnitude tariff discrimination can be welfare preferred to mfn even when the average tariff is actually lower under mfn jel classification f13 f12 une analyse de la clause de la nation la plus favorisee npf quand il y a asymetrie des couts et de la structure de marche ce texte fait une comparaison de bien etre de la clause npf et de la discrimination tarifaire dans un modele oligopolistique de commerce international entre deux pays exportateurs et un pays importateur alors que la strategie npf est superieure a celle de la discrimination tarifaire du point de vue du bien etre mondial quand les pays exportateurs sont asymetriques soit dans leurs couts soit dans la structure du marche tel n est pas necessairement le cas quand les deux types d asymetrie coexistent en particulier quand des exportateurs dont les couts sont eleves sont fusionnes et que le desavantage de couts est d une magnitude moyenne la discrimination tarifaire peut etre preferee a la strategie npf et ce meme quand le droit de douane moyen est en fait plus bas dans un regime npf

foreign equity participation under incomplete information abstract this paper demonstrates how an interaction between ownership rules and trade policy provides a rationale for a host government to impose local equity requirement ler on a foreign multinational it presents a model where in the presence of an import tariff ler can serve as an effective instrument for a host government in removing any incentive for the multinational to mimic an inefficient firm when the government does not have complete information on the cost of the multinational s foreign unit it is shown that the ler can increase national welfare by removing possible distortions under incomplete information it is also shown that product market competition lowers the ler

endogenous trip scheduling the henderson approach reformulated and compared with the vickrey approach abstract the henderson approach to modeling peak period congestion lacks equilibria when lateness is prohibited this paper reformulates the henderson approach and compares it to the vickrey approach both analytically and numerically the behavior of the reformulated henderson approach varies with its elasticity of travel delay with respect to traffic flow while the vickrey approach lacks such flexibility the behavior of the vickrey approach is the limit of that of the reformulated henderson approach as the elasticity of travel delay goes to infinity

optimal tariffs and the choice of technology discriminatory tariffs vs the most favored nation clause abstract we compare the effects of optimal tariffs on the technology choice of exporters under the discriminatory tariffs regime and the most favored nation mfn clause it is shown that a lower marginal cost mc technology will be chosen in equilibrium under the mfn clause as a result the importing country s long run welfare increases with the adoption of mfn while in most cases the exporting countries welfare decreases however ex post technology choice the importing country prefers discriminatory tariffs this result therefore highlights the role of mfn as a commitment mechanism to resolve a time inconsistency problem facing the importing country

asset price shocks financial constraints and investment evidence from japan this paper examines investment spending of japanese firms around the asset price bubble in the late 1980s and makes three contributions to our understanding of how stock valuations affect investment first corporate investment responds significantly to nonfundamental components of stock valuations during asset price shocks fundamentals matter less clearly the stock market is not a sideshow second the time series variation in the sensitivity of investment to cash flow is affected more by changes in monetary policy than by shifts in collateral values finally asset price shocks primarily affect firms that rely more on bank financing and not necessarily those that use equity markets for financing only the investment of bank dependent firms responds to nonfundamental valuations in addition the cash flow sensitivity of bank dependent firms with large collateral assets decreases when asset prices become inflated but increases dramatically when asset prices collapse and monetary policy tightens

tariff policy for a monopolist in a signaling game abstract we examine the incentives for a government to levy an optimal tariff on a foreign monopolist with unknown costs with complete information the home government uses a discriminatory tariffs policy to extract rents if the government is incompletely informed about costs we show that under reasonable conditions the unique equilibrium involves pooling where the firm exports the same quantity regardless of its efficiency we find that in general home welfare is higher under alternative policies such as uniform tariffs or free trade suggesting that trade policies that are motivated by rent extraction are unlikely to be robust to the introduction of incomplete information

trade and trade policy with imperfect competition the case of identical products and free entry abstract this paper analyses intra industry trade between economies containing an imperfectly competitive industry in which firms produce a homogeneous output production is subject to increasing returns to scale and there is free entry and exit of firms trade is shown to unambiguously increase welfare by reducing the degree of monopoly in each market and increasing firm size the effects of differences in technology and endowments on the pattern of trade and welfare are examined import tariffs are shown to raise welfare in the country employing the tariff and the welfare implications of various types of industry subsidy are examined

export subsidies and high productivity cause or effect according to the emerging strategic theory of trade policy countries selling in imperfectly competitive world markets may benefit from export subsidies this paper demonstrates that the theory predicts that it is the countries with the lowest production costs that offer the highest subsidies it is argued that this result diminishes the attraction of the theory as a positive explanation of trade policy

anti dumping and countervailing duties under oligopoly abstract this paper constructs a conjectural variations model of international oligopoly in which the home country s optimal policy responses to the foreign government s subsidies and foreign firms dumping can be calculated some theoretical support is found for tariffs that countervail part of the foreign export subsidy the optimal fraction depends on the size of own and cross effects in demand and on the extent of market competition however no normative case is found for anti dumping duties

managed trade with imperfect information central to the general agreement on tariffs and trade gatt agreement signed in 1947 by 23 nations was the reduction of tariffs this had the direct result of bringing down the average ad valorem tariff on industrial goods from over 40 in 1947 to under 4 by the time of the uruguay round in 1995 furthermore following the kennedy round of 1969 the objectives of the gatt and of its successor the world trade organization wto were expanded so as to help bring down nontariff barriers as well remarkably these reductions were achieved in the absence of any external enforcement mechanism intended to punish gatt wto violators commitments were kept only as long as nations continued to view adherence to the agreements as being in their mutual interest 2 it is precisely because the contracting parties of the gatt wto have made it their top priority to reduce trade distortions that the subject of safeguards as an exception to the general rule of liberalizing trade comes into play when governments know they can increase tariffs temporarily in the event of a surge in import volume they agree to negotiate a more substantial tariff reduction during the negotiation stage 3 the move toward special protection is motivated in part by the fact that volatility in trade flows has become a more important source of domestic disruption these special protection policy tools are typically used to limit the rate of import or export expansion from that which would occur in the absence of intervention they are aimed at mitigating the underlining changes in trade flows where the basic insight developed in the literature is consistent with different government objectives to this end corden 1974 has argued that countries rarely initiate protection for the purpose of capturing the terms of trade gains presumably because of the fear of future retaliation by their trading partners countries

exchanging market access at the outsiders expense the case of customs unions under a customs union countries can exchange preferential market access by coordinating external tariffs to shift profits from excluded countries i show that the exporting rents resulting from this coordination can offset trade diversion losses produced by the union even if its members are relatively small in world markets such gains come however at the expense of excluded countries i show that small countries can use customs unions also to foster multilateral cooperation by increasing the incentives of excluded countries to support global free trade le cas des unions douanieres dans le cas d une union douaniere les pays peuvent marchander l acces preferentiel a un marche en coordonnant leurs tarifs externes de maniere a extraire des profits des pays exclus on montre que les rentes a l exportation qui resultent de cette coordination peuvent compenser les pertes attribuables a la diversion du commerce qui decoule de l union douaniere meme si ses membres sont relativement de petite taille dans les marches mondiaux de tels gains se font cependant aux depens des pays exclus on montre que les petits pays peuvent utiliser les unions douanieres pour stimuler la cooperation multilaterale en accroissant les incitations des pays exclus a poursuivre des strategies de libre echange global

the role of mfn under asymmetries in environmental standards abstract we critically examine the implications of the most favored nation mfn clause under asymmetric environmental standards using an oligopolistic intra industry trade model we show that environmentally beneficial trade diversion and higher world welfare obtain under tariff discrimination relative to mfn

on the emergence of an mfn club equal treatment in an unequal world motivated by gatt we endogenize the formation of a club whose members have to abide by the mfn principle of non discrimination the underlying model is that of oligopolistic intraindustry trade while an mfn club does not alter average tariff levels across countries it increases aggregate world welfare makes non members worse off and can immiserize its high cost members these results imply that i core wto rules such as mfn are valuable even if multilateral negotiations deliver limited trade liberalization and ii the distributional effects of mfn maybe one reason why developing countries have been granted special and differential treatment at the wto jel classification f13 f10 f15

tariffs and the most favored nation clause abstract in an n country oligopoly model of intraindustry trade n 3 this paper explores the economics of the most favored nation mfn principle under the non cooperative tariff equilibrium each country imposes higher tariffs on low cost producers relative to high cost ones thereby causing socially harmful trade diversion mfn adoption by each country improves world welfare by eliminating this trade diversion under linear demand mfn adoption by the country with the average production cost is most desirable high cost countries refuse reciprocal mfn adoption with other countries and also lose even if others engage in reciprocal mfn adoption amongst themselves

tariffs licensing and market structure this paper challenges the conventional wisdom that exclusive owners of an advanced technology are always better off when producing as a monopolist than when competing against another firm competition against a less efficient firm weakens the power that a host country can exert on the incumbent in the form of its tariff policy we show that this gives a motive for a monopolist to license its technology to another foreign firm a host country gains more from increased competition if it can induce the foreign incumbent to transfer technology to the host country firm we show that the host country can do so by tariff commitment we also discuss the implications of bargaining under licensing and bertrand competition in the product market hence this paper qualifies and extends the recent work of kabiraj and marjit protecting consumers through protection the role of tariff induced technology transfer european economic review 47 113 124