Second-best trade policies in Cournot oligopoly
- Corchón Díaz, Luis C.
- González-Maestre, Miguel
ISSN: 1435-5469
Any de publicació: 2001
Volum: 3
Número: 2
Pàgines: 81-96
Tipus: Article
Altres publicacions en: Spanish economic review
Objectius de Desenvolupament Sostenible
Resum
Abstract. In this paper we study the optimal import policy in an oligopolistic market with a given number of quantity-setting firms. In the absence of fixed costs, we show that if the policy instrument is an import quota, the optimal policy is either free trade or autarky, while if the instrument is a tariff the optimal policy is neither free trade nor autarky. In the case of fixed costs, we show that contrary to the traditional protectionist argument, a restrictive import policy might increase domestic welfare by increasing domestic consumers' surplus, instead of increasing domestic profits.