Welfare-ranking Ad Valorem and Specific Tariffs under Monopolistic Competition
Jan Guldager Jørgensen, Philipp J. H. Schröder
Abstract
Jan Guldager Jørgensen, Philipp J. H. Schröder
Abstract
Actual trade and tariff policy prefers ad valorem tariffs to specific tariffs. Yet in this paper we show that, in a setting of monopolistic competition, realizing a given restriction on imports via a specific tariff would generate more consumer utility than obtaining the same restriction via an ad valorem tariff.
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Actual trade and tariff policy prefers ad valorem tariffs to specific tariffs. Yet in this paper we show that, in a setting of monopolistic competition, realizing a given restriction on imports via a specific tariff would generate more consumer utility than obtaining the same restriction via an ad valorem tariff.
Key concepts: Monopolistic competition, Ad valorem tax, Tariff, Economics, Ranking (information retrieval), Competition (biology), Microeconomics, Welfare