Trade Policy and Excess Capacity in Developing Countries

The presence of quotas on imported inputs that are based on installed capacity can lead to capacity underutilization in manufacturing industries of developing countries. A replacement of such quotas by tariffs leads to full-capacity utilization under both perfectly and imperfectly competitive markets. Furthermore, such a policy also eliminates strategic advantages for oligopolistic firms that arise in quota-based regimes.

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Year of publication:	1990
Authors:	Sahay, Ratna
Published in:	IMF Staff Papers. - Palgrave Macmillan, ISSN 1020-7635. - Vol. 37.1990, 3, p. 486-508
Publisher:	Palgrave Macmillan

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

Persistent link: https://www.econbiz.de/10008914877