The Choice of Optimal Protection under Oligopoly between Specific Tariff and Ad Valorem Tariff

This paper focuses on the ranking between specific tariff and ad valorem tariff in a Bertrand duopoly models with heterogeneous products.We find that the impact of both kinds of tariffs on domestic welfare depends on the specific characteristics of domestic consumers' utility function.Specific tariff is more restrictive than ad valorem tariff on import.For each equilibrium specific tariff,there exists a welfare Pareto-superior ad valorem tariff,and the difference of domestic welfares under these two policy instruments lies on the elasticity of domestic demand function for foreign product.