Tariffs versus quotas with strategic investment

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5 Citations (Scopus)

Abstract

The relative efficiency of tariffs versus quotas is analysed in a Cournot oligopoly with strategic investment, introducing quota licence fees to neutralize the international distributional effect. When such licence fees remove quota rents from foreign firms, then for the case of constrained entry with a sufficiently large number of firms, quotas frequently hold a welfare advantage, since tariffs relatively aggravate the ineffeciency from overinvestment. In the case of free entry and exit, however, tariffs hold a welfare advantage, since there is greater benefit of increasing returns to scale to the economy by avoidance of excessive entry of firms. JEL Classification: F1, L1.

Original languageEnglish
Pages (from-to)71-91
Number of pages21
JournalCanadian Journal of Economics
Volume32
Issue number1
DOIs
Publication statusPublished - 1999 Jan 1

ASJC Scopus subject areas

  • Economics and Econometrics

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