Quarterly Journal of Economics Vol. 97 No. 2 1982
Tariffs, Quotas, and Market Structure
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.
- DOI
- 10.2307/1880759
- Volume
- 97
- Issue
- 2
- Pages
- 295
- Sources
- openalex crossref