Competition Policy or Tariff Policy: Which is More Effective?

In the recent literature, it has been demonstrated that competition policy can serve as a substitute for tariff policy in creating a beggar-thy-neighbor effect. Common wisdom, however, tells that competition policy is at best the second best in creating such an effect; obviously the first best is tariff policy. The present study demonstrates that this common wisdom no longer holds if a country can impose a tariff on only a part of the entire spectrum of imports. In that case, tariff policy may not be as effective a beggar-thy-neighbor policy as competition policy.