Brou, Daniel; Ruta, Michele - In: Swiss Journal of Economics and Statistics 145 (2009) 4, pp. 405-410
This paper provides a simple model that highlights the political substitutability between import tariffs and production … sector induce the government to set inefficiently high tariffs and subsidies. If the government commits the tariff to a lower … equilibrium obtain) a larger production subsidy. This political substitutability between tariffs and subsidies is shown to reduce …