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Endogenous Product Differentiation and Trade Policy: Implications for the U.S. Food Industry

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  • D. Kent Lanclos
  • Thomas W. Hertel

Abstract

The effects of tariffs on intermediate inputs and final goods in monopolistically competitive industries are assessed. Output per firm and firm numbers decline due to input tariffs. When coupled with output tariffs, the change in firm numbers is ambiguous. Numerical illustrations for U.S. food processing industries indicate the decline in firm numbers is larger than the decrease in firm output for input tariffs. Monopolistic competition strengthens the response to input tariffs compared to perfect competition. Considering the joint effects of input and output tariffs, the direction of change in total output may differ between monopolistic and perfect competition.

Suggested Citation

  • D. Kent Lanclos & Thomas W. Hertel, 1995. "Endogenous Product Differentiation and Trade Policy: Implications for the U.S. Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 591-601.
    • Handle: RePEc:oup:ajagec:v:77:y:1995:i:3:p:591-601.
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    File URL: http://hdl.handle.net/10.2307/1243227
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    Cited by:

    1. Peter Dixon & Michael Jerie & Maureen Rimmer, 2016. "Modern Trade Theory for CGE Modelling: The Armington, Krugman and Melitz Models," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 1-110, June.
    2. Stephen Devadoss & Kent Lanclos, 2000. "Trade in imperfectly competitive industries: the role of market size and consumer preferences," Applied Economics, Taylor & Francis Journals, vol. 32(9), pages 1189-1200.
    3. Bent, Peter H., 2020. "Recovery from financial crises in peripheral economies, 1870–1913," Explorations in Economic History, Elsevier, vol. 78(C).
    4. Marion Desquilbet & Hervé Guyomard, 1998. "Taxes and subsidies in vertically related markets," Post-Print hal-02283455, HAL.
    5. van Berkum, Siemen & van Meijl, Hans, 2000. "The application of trade and growth theories to agriculture: a survey," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(4), pages 1-38.
    6. Marion Desquilbet & Hervé Guyomard, 1999. "Public policy in vertically related markets : a Cournot oligopoly-oligopsony model," Post-Print hal-02283456, HAL.

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