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The Optimal Tariff Structure in Higher Dimensions

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  • Bond, Eric W

Abstract

This paper generalizes to higher dimensions the two good result that the optimal trade policy for a large country is an import tariff. A weak form of the optimal tariff, requiring that an import (export) good be most (least) protected holds under gross substitutability. Sufficient conditions are obtained for a strong form of the optimal tariff (which requires that all imports be more protected than any export) and also for the trade tax revenue to be nonnegative in the optimal policy. Copyright 1990 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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  • Bond, Eric W, 1990. "The Optimal Tariff Structure in Higher Dimensions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 31(1), pages 103-116, February.
    • Handle: RePEc:ier:iecrev:v:31:y:1990:i:1:p:103-16
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    Cited by:

    1. Dinlersoz, Emin & Dogan, Can, 2010. "Tariffs versus anti-dumping duties," International Review of Economics & Finance, Elsevier, vol. 19(3), pages 436-451, June.
    2. Eric W. Bond, 2001. "Commercial Policy in a "Fragmented" World," American Economic Review, American Economic Association, vol. 91(2), pages 358-362, May.
    3. Chantal Le Mouël, 1992. "Import tariffs, domestic distortions and "market linkages"," Working Papers hal-01959660, HAL.
    4. Yoshitomo Ogawa & Nobuhiro Hosoe, 2020. "Optimal indirect tax design in an open economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(5), pages 1081-1107, October.
    5. Arnaud Costinot & Guido Lorenzoni & Iván Werning, 2014. "A Theory of Capital Controls as Dynamic Terms-of-Trade Manipulation," Journal of Political Economy, University of Chicago Press, vol. 122(1), pages 77-128.
    6. Arnaud Costinot & Andrés Rodríguez‐Clare & Iván Werning, 2020. "Micro to Macro: Optimal Trade Policy With Firm Heterogeneity," Econometrica, Econometric Society, vol. 88(6), pages 2739-2776, November.
    7. Dr. Deniz AYTAÇ & Dr. Sabiha KILIÇ, 2014. "The Short - And Long -Term Effects of Trade Taxes on Vertical Specialization," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(6), pages 732-743, June.
    8. Arnaud Costinot & Dave Donaldson & Jonathan Vogel & Iván Werning, 2015. "Comparative Advantage and Optimal Trade Policy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(2), pages 659-702.
    9. Rudsinske, Jonas F., 2020. "How protectionism harms workers under oligopoly," University of Göttingen Working Papers in Economics 407, University of Goettingen, Department of Economics.
    10. Grossman, Gene, 2016. "The Purpose of Trade Agreements," CEPR Discussion Papers 11151, C.E.P.R. Discussion Papers.
    11. Carsten Kowalczyk & Raymond Riezman, 2013. "Trade Agreements," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 13, pages 367-388, Palgrave Macmillan.
    12. Beshkar, Mostafa & Shourideh, Ali, 2020. "Optimal trade policy with trade imbalances," Journal of Monetary Economics, Elsevier, vol. 109(C), pages 65-82.
    13. Takumi Naito, 2021. "Can The Optimal Tariff Be Zero For A Growing Large Country?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 1237-1280, August.
    14. Bond, Eric W. & Syropoulos, Constantinos, 1996. "The size of trading blocs Market power and world welfare effects," Journal of International Economics, Elsevier, vol. 40(3-4), pages 411-437, May.
    15. Emily J. Blanchard, 2009. "Trade taxes and international investment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(3), pages 882-899, August.
    16. Opp, Marcus M., 2010. "Tariff wars in the Ricardian Model with a continuum of goods," Journal of International Economics, Elsevier, vol. 80(2), pages 212-225, March.
    17. Yoshitomo Ogawa, 2012. "The structure of Nash equilibrium tariffs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 51(1), pages 139-161, September.
    18. Carsten Kowalczyk, 1990. "Welfare and Customs Unions," NBER Working Papers 3476, National Bureau of Economic Research, Inc.
    19. Bond, Eric W. & Duan, Yuwan & Ji, Ting & Lu, Yi, 2023. "Trade and welfare effects of export tax: Theory and evidence from China's incomplete export VAT rebate," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 542-560.
    20. Yu-Ter Wang, 2008. "On the Optimality of Escalated Tariff Structure: A Cournot Duopoly Analysis," The American Economist, Sage Publications, vol. 52(2), pages 72-76, October.

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