Karp, Larry; Newbery, David M. - In: Canadian Journal of Economics 25 (1992) 1, pp. 1-21
The standard solution of the open-loop optimal import tariff is normally time inconsistent. This paper shows why and derives the dynamically consistent Markov perfect tariff. The two tariffs are compared; they differ except for a special class of import demands. The time paths of tariffs and the...