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Effects of Multilateral Trade Liberalization on Prices

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  • Jota Ishikawa
  • Hiroshi Mukunoki

Abstract

To analyze the effects of simultaneous tariff reductions by multiple importing countries on prices, we construct a simple three‐country model where a good is produced by a monopolist with nonconstant marginal cost and imported by two countries. We compare two representative tariff‐reduction formulas: the “fixed‐amount” and the “uniform percentage” reductions. The uniform percentage reductions may increase the consumer price in the importing country, whose initial tariff is lower. Thus, importing countries with relatively low tariffs may prefer a bilateral trade agreement to a multilateral one to ensure consumer gains.

Suggested Citation

  • Jota Ishikawa & Hiroshi Mukunoki, 2008. "Effects of Multilateral Trade Liberalization on Prices," Review of International Economics, Wiley Blackwell, vol. 16(1), pages 37-44, February.
    • Handle: RePEc:bla:reviec:v:16:y:2008:i:1:p:37-44
    DOI: 10.1111/j.1467-9396.2007.00670.x
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    References listed on IDEAS

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    Cited by:

    1. Kenji Fujiwara, 2013. "A Win–Win–Win Tariff–Tax Reform under Imperfect Competition," Review of International Economics, Wiley Blackwell, vol. 21(5), pages 857-867, November.
    2. Hayakawa, Kazunobu & Ito, Tadashi & Mukunoki, Hiroshi, 2022. "Lerner meets Metzler: Tariff pass-through of worldwide trade," Journal of the Japanese and International Economies, Elsevier, vol. 63(C).
    3. Kenji Fujiwara & Ryoma Kitamura, 2014. "A trade and domestic tax reform in imperfectly competitive markets," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 23(6), pages 785-795, September.
    4. Jinji, Naoto & Mizoguchi, Yoshihiro, 2016. "Rules of origin and technology spillovers from foreign direct investment under international duopoly," Japan and the World Economy, Elsevier, vol. 40(C), pages 47-60.
    5. Fujiwara, Kenji, 2014. "Pareto-improving tariff-tax reforms under imperfect competition," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 12-20.
    6. Kenji Fujiwara, 2014. "Tax Principles and Coordination of Trade and Domestic Policies Under Imperfect Competition," Australian Economic Papers, Wiley Blackwell, vol. 53(1-2), pages 29-40, June.
    7. Jota Ishikawa & Yoichi Sugita & Laixun Zhao, 2011. "Commercial Policy and Foreign Ownership," Review of International Economics, Wiley Blackwell, vol. 19(2), pages 300-312, May.

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