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Tariffs, Quotas, and Market Structure

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  • Motoshige Itoh
  • Yoshiyasu Ono

Abstract

This paper examines the effects of tariffs and quotas on the pricing pattern of producers in the case of duopoly by a domestic monopolist and a foreign monopolist. It is pointed out that tariffs and quotas may induce completely different pricing patterns in the two producers. Under a quota, it is always profitable for the home producer to be a price leader and for the foreign producer to be a follower, whereas under a tariff either producer may become a leader. It is also proved that, whatever leader-follower relation is chosen under a tariff, a quota always bring about a higher domestic price than the tariff as long as both permit the same amount of imports.

Suggested Citation

  • Motoshige Itoh & Yoshiyasu Ono, 1982. "Tariffs, Quotas, and Market Structure," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 97(2), pages 295-305.
    • Handle: RePEc:oup:qjecon:v:97:y:1982:i:2:p:295-305.
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    File URL: http://hdl.handle.net/10.2307/1880759
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    Citations

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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. Yoshitomo Ogawa & Yoshiyasu Ono, 2011. "The Byrd Amendment as Facilitating a Tacit International Business Collusion," Review of International Economics, Wiley Blackwell, vol. 19(5), pages 877-893, November.
    3. Kala Krishna, 1990. "Export Restraints With Imperfect Competition: A Selective Survey," NBER Working Papers 3244, National Bureau of Economic Research, Inc.
    4. Taiji Furusawa & Keisaku Higashida & Jota Ishikawa, 2004. "Tariffs versus quotas in the presence of imperfect competition and cross-border externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 445-458, May.
    5. Luca Lambertini & Arsen Palestini, 2018. "Voluntary Export Restraints in a Trade Model with Sticky Price: Linear and Nonlinear Feedback Solutions," Dynamic Games and Applications, Springer, vol. 8(3), pages 507-518, September.
    6. Hong Hwang & Cheng-Hau Peng & Hsiu-Ling Wu, 2013. "Tariffication and Welfare in a Differentiated Duopoly," The World Economy, Wiley Blackwell, vol. 36(7), pages 899-911, July.
    7. Okawa, Masayuki, 2006. "On the comparison of tariffs and quotas in oligopolistic intermediate goods markets," Japan and the World Economy, Elsevier, vol. 18(2), pages 169-180, March.
    8. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Tariffs, quotas and terms-of-trade: The case of New Zealand," Journal of International Economics, Elsevier, vol. 46(2), pages 313-332, December.
    9. Daisuke Hirata & Toshihiro Matsumura, 2011. "Price leadership in a homogeneous product market," Journal of Economics, Springer, vol. 104(3), pages 199-217, November.
    10. Okumura, Yasunori, 2015. "Volume and share quotas in Cournot competition," Economic Modelling, Elsevier, vol. 47(C), pages 137-144.
    11. Kala Krishna, 1988. "What Do Voluntary Export Restraints Do?," NBER Working Papers 2612, National Bureau of Economic Research, Inc.
    12. Toshihiro Matsumura & Yasunori Okumura, 2014. "Comparison between specific taxation and volume quotas in a free entry Cournot oligopoly," Journal of Economics, Springer, vol. 113(2), pages 125-132, October.
    13. Krishna, Kala, 1989. "Trade restrictions as facilitating practices," Journal of International Economics, Elsevier, vol. 26(3-4), pages 251-270, May.
    14. Park, Chongkook, 1990. "Three essays on strategic trade policy: precommitment, time consistency, and effects of a ratio quota," ISU General Staff Papers 1990010108000010878, Iowa State University, Department of Economics.
    15. Mohammad Amin, 2004. "Market Structure and Trade Policy under Asymmetric Information," International Trade 0402004, University Library of Munich, Germany.
    16. Kazumi Asako & Yoshiyasu Ono, 1994. "Tariffs, Quotas, and Inventory Adjustment," NBER Chapters, in: Macroeconomic Linkage: Savings, Exchange Rates, and Capital Flows, pages 273-293, National Bureau of Economic Research, Inc.
    17. Hideo Konishi & Kamal Saggi & Shlomo Weber, 2023. "Endogenous trade policy under foreign direct investment," World Scientific Book Chapters, in: Kamal Saggi (ed.), Technology Transfer, Foreign Direct Investment, and the Protection of Intellectual Property in the Global Economy, chapter 23, pages 523-542, World Scientific Publishing Co. Pte. Ltd..
    18. Xiangqun Chen, 1994. "Competition and the Equivalence of Tariffs and Quotas," The American Economist, Sage Publications, vol. 38(2), pages 36-39, October.
    19. Richard Damania & Per Fredriksson & Thomas Osang, 2004. "Collusion, Collective Action and Protection: Theory and Evidence," Public Choice, Springer, vol. 121(3), pages 279-308, February.

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