Trade policy with endogenous entry revisited
This paper revisits the effects of tariffs and quotas in a competitive setting where three results are thought to hold. These are: that quotas are equivalent to specific tariffs, the form of tariffs--specific or ad valorem--does not matter, and that the way in which a quota is allocated has no real effects as it only affects the allocation of rents, not their size. We show that all three of these results are false when entry/exit is endogenous. Equivalence holds only if the initial level of entry is set at the long-run level under the quota.
Year of publication: |
2010
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Authors: | Krishna, Kala ; Tan, Ling Hui |
Published in: |
Journal of International Economics. - Elsevier, ISSN 0022-1996. - Vol. 80.2010, 2, p. 271-279
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Publisher: |
Elsevier |
Saved in:
Online Resource
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