Optimum-Welfare and Maximum-Revenue Tariffs in Vertically Related Markets

Kawabata, Yasushi (2014) Optimum-Welfare and Maximum-Revenue Tariffs in Vertically Related Markets. Modern Economy, 05 (05). pp. 589-597. ISSN 2152-7245

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Abstract

This paper compares the optimum-welfare tariffs with the maximum-revenue tariffs in a model of vertically related markets characterized by Cournot competition. It shows that the optimum-welfare tariff on the intermediate good exceeds the maximum-revenue tariff if the home intermediate-good firm is much more cost-competitive than the foreign intermediate-good firm. Further, the optimum-welfare tariff on the final good exceeds the maximum-revenue tariff if the home intermediate-good firm is significantly inefficient compared to the foreign intermediate-good firm. It is less likely that the optimum-welfare tariffs on the intermediate and the final good, respectively, exceed the maximum-revenue tariffs on the intermediate and the final good in the presence of vertical trade structures than in their absence.

Item Type: Article
Subjects: STM Digital Press > Multidisciplinary
Depositing User: Unnamed user with email support@stmdigipress.com
Date Deposited: 17 Jul 2023 05:43
Last Modified: 07 Sep 2024 10:32
URI: http://publications.articalerewriter.com/id/eprint/1298

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