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The Tariff-Jumping Argument and Location Theory

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  • Hwang, Hong
  • Mai, Chao-cheng

Abstract

When examining the tariff-jumping effect, the literature emphasizes the cost-induced effect, which states that a foreign firm has an incentive to jump over the tariff wall in order to locate in a foreign territory, and thereby escape tariffs. The authors set up a location model to show what they refer to as the location-induced effect on tariff-jumping. This location-induced effect, together with the traditional cost-induced effect, makes tariff-jumping more (less) likely to take place when the production function in question exhibits decreasing (increasing) returns to scale. Copyright 2002 by Blackwell Publishing Ltd.

Suggested Citation

  • Hwang, Hong & Mai, Chao-cheng, 2002. "The Tariff-Jumping Argument and Location Theory," Review of International Economics, Wiley Blackwell, vol. 10(2), pages 361-368, May.
    • Handle: RePEc:bla:reviec:v:10:y:2002:i:2:p:361-68
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    Cited by:

    1. Carlos A. Cinquetti, 2007. "Technology Service And Factor Intensity: The Export Impact From Multinationals," Anais do XXXV Encontro Nacional de Economia [Proceedings of the 35th Brazilian Economics Meeting] 056, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Almenar-Llongo, Vicent & Muñoz de Prat, Javier & Orero-Blat, Maria, 2021. "Qualitative analysis for joint ventures as an entry mode in foreign direct investment," Journal of Business Research, Elsevier, vol. 123(C), pages 324-332.

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