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Tariff Policy with Intracountry Firm Mobility: A Spatial Analysis

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  • Mark G. Herander

Abstract

Previous studies of trade policy in a spatial setting assume the production site of firms to be fixed. In contrast, this paper examines the impact of an import tariff on a component good when a monopoly final good producer is free to locate anywhere in the domestic market. A component tariff that induces the monopolist to move away from the foreign border reinforces the protectionist effects of the tariff with fixed location. At the same time, the tariff-induced relocation may increase domestic welfare whereas with fixed location welfare always falls.

Suggested Citation

  • Mark G. Herander, 1997. "Tariff Policy with Intracountry Firm Mobility: A Spatial Analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 413-428, May.
  • Handle: RePEc:cje:issued:v:30:y:1997:i:2:p:413-28
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    Cited by:

    1. Takahashi, Takaaki, 2003. "International trade and inefficiency in the location of production," Journal of the Japanese and International Economies, Elsevier, vol. 17(2), pages 134-152, June.

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