On the Welfare Equivalence of Tariffs and Quotas under Duopoly

It is shown that the equivalence of tariffs and quotas is not valid if one defines equivalence in terms of welfare. In a duopoly where a home and a foreign firm compete on a domestic market, an optimal quota leads to a lower welfare than an optimal tariff. Still, any import quantity can be achieved either by a quota or an appropriately chosen tariff. Furthermore we show that moving from autarchy to free trade may reduce welfare.

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Year of publication:	2001
Authors:	Egli, Dominik ; Westermann, Frank
Published in:	Swiss Journal of Economics and Statistics (SJES). - Schweizerische Gesellschaft für Volkswirtschaft und Statistik / Société Suisse d"Économie et de Statistique - SGVS/SSES, ISSN 0303-9692. - Vol. 137.2001, II, p. 171-182
Publisher:	Schweizerische Gesellschaft für Volkswirtschaft und Statistik / Société Suisse d"Économie et de Statistique - SGVS/SSES

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Extent:	application/pdf
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005148828