Campus Units

Economics

Document Type

Article

Publication Version

Published Version

Publication Date

6-1988

Journal or Book Title

The American Economic Review

Volume

78

Issue

3

First Page or Article ID Number

395

Last Page

401

Abstract

The optimal tariff for a large country equals the reciprocal of the foreign export elasticity of supply. However, if production decisions occur before consumption decisions, the ex ante optimal tariff is not time consistent because the ex post elasticity is less than the ex ante elasticity. We show all countries are worse off if the large country cannot precommit to its ex ante optimal tariff, and that all countries can gain if the large country taxes domestic production of importables.

Comments

This is an article from The American Economic Review 78 (1988): 395. Posted with permission.

Copyright Owner

American Economic Association

Language

en

File Format

application/pdf

Share

COinS