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Trade Policy and Import Competition under Fluctuating Prices

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  • Paul Strebel
  • Shabtai Donnenfeld

Abstract

When subsidies and tariffs are applied to imports with fluctuating prices, it is shown that the output response of domestic producers depends on market structure and their attitude toward risk. The domestic industry response is contrasted under two types of market structure, a monopoly and a competitive industry. Some unanticipated results suggest caution in the implementation of trade policy.

Suggested Citation

  • Paul Strebel & Shabtai Donnenfeld, 1981. "Trade Policy and Import Competition under Fluctuating Prices," NBER Working Papers 0628, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0628
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    References listed on IDEAS

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    1. Helpman, Elhanan & Razin, Assaf, 1980. "Efficient Protection under Uncertainty," American Economic Review, American Economic Association, vol. 70(4), pages 716-731, September.
    2. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    3. Corden, W. M., 1971. "The substitution problem in the theory of effective protection," Journal of International Economics, Elsevier, vol. 1(1), pages 37-57, February.
    4. Fishelson, Gideon & Hillman, Arye L., 1979. "Domestic monopoly and redundant tariff protection," Journal of International Economics, Elsevier, vol. 9(1), pages 47-55, February.
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