REVENUE SEEKING AND METZLER PARADOXES

Bhagwati and Srinivasan (1980) demonstrated the interesting possibility that once revenue seeking is introduced the Metzler paradox may arise even for a small country: that is, a tariff will decrease the output of the inportable good. In this note, we establish the conditions under which the Metzler production paradox will arise and discuss the relation between the importable-good and the exportable-good production paradoxes. Copyright 1989 Blackwell Publishers Ltd..