Cost Asymmetries and Import Tariff Policy in a Vertically Related Industry
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This chapter examines the effects of the cost asymmetry of final goods production and the cost difference in intermediate goods production on the import tariffs on both goods imposed by two countries’ governments in a model with vertically related markets characterized by Cournot duopolies. It is shown that the country with the highest-cost final (intermediate) goods firm may levy the lowest import tariff on the final (intermediate) goods.
KeywordsImport tariff Vertically related markets Cournot duopoly
This work has been financially supported by a Grant-in-Aid for Scientific Research (B) (No. 25285079).
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