Braga de Macedo, Jorge - C.E.P.R. Discussion Papers - 1987
In the classic analysis of smuggling, importers choose the optimal mix of legal and illegal trade, given trade taxes …, changes in the (long-run) black market premium are a weighted average of changes in trade taxes, whereas changes in the … smuggling ratios depend on the ratio of trade taxes. Thus, an import tariff and an export subsidy rising at the same rate would …