Economics Dictionary of ArgumentsHome
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| Optimal tariffs: Optimal tariffs are import taxes set by a country to maximize its own economic welfare. By exploiting its market power, a country can lower the world price of imports, improving its terms of trade. However, this can lead to trade wars and retaliation, reducing global efficiency and cooperation. See also Tariffs, International trade, Trade policy, Strategic trade policy._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Phillip Swagel on Optimal Tariffs - Dictionary of Arguments
Krugman III 28 Optimal Tariffs/optimal trade policy/labour rents/Kala Krishna/Kathleen Hogan/Phillip Swagel: When the production subsidy is unavailable, the optimal tariff in the presence of labor rents is positive for all years, as opposed to the import subsidy typically optimal in the absence of labor rents. Again this is expected, as the tariff must partly do the job of the unavailable production subsidy, and the higher tariff encourages domestic production. The presence of labor rents thus dramatically changes the nature of the optimal policies. (…) compare the jointly optimal tariffs with and without labor rents to the optimal tariffs when a production subsidy is unavailable. Krugman III 29 Tariff: The tariff is always larger (less negative) in the latter case. Again, this has a targeting interpretation. When a subsidy is unavailable, the tariff targets the monopoly distortion which is really best targeted by the subsidy. Subsidies: Similarly, comparing the jointly optimal subsidy and the optimal subsidy when the tariff is set to the MFN level* shows that the subsidy is slightly lower when applied by itself. When the tariff is not available, reducing the subsidy on production acts to encourage imports. In the above comparisons, we see at work the general principle of targeting instruments to the relevant distortion. Optimal trade policy: We also see that in the absence of an instrument, the optimal level of the remaining instrument is set to help reduce other distortions. >International trade/Kala Krishna. * ((s) The MFN (Most-Favored Nation) principle means that a country treats all its trading partners equally when it grants trade privileges or advantages.) Kala Krishna, Kathleen Hogan, and Phillip Swagel. „The Nonoptimality of Optimal Trade Policies: The U.S. Automobile Industry Revisited, 1979-1985.“ In: Paul Krugman and Alasdair Smith (Eds.) 1994. Empirical Studies of Strategic Trade Policy. Chicago: The University of Chicago Press._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Swagel, Phillip | ||
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