Title: More on the Equivalence of Tariffs and Quotas
Abstract: In an earlier paper on the equivalence of tariffs and quotas [1], I argued that this equivalence-defined such that a tariff would lead to a level of imports which, if alternatively set as a quota, would generate the same implicit tariff-followed from the assumptions of competitive domestic production, supply of imports, and holding of quotas. This universality of competitiveness sufficed to guarantee equivalence, as defined. It was further argued that a departure from these assumptions could, in general, destroy this equivalence and several such departures were analyzed: (1) perfect competition in domestic production replaced by pure mnonopoly in production; (2) perfect competition among quota-holders replaced by monopolist-holding of quota; and (3) simultaneous presence of monopoly in quota-holding and in domestic production [1, p. 54]. Recent communications, however, from Hirofumi Shibata [2 ] who has analyzed the case where there is monopolistic supply of imports, and from G. Yadav [3] who has analyzed the case where there is monopolistic import under both tariffs and quotas, have suggested the following clarifications and extensions of some importance. 1. The definition of equivalence, as stated above, will run into soine difficulty if the tariff situation is itself characterized by a discrepancy between the c.i.f. import price and the domestic price (and hence an implicit tariff) which differs from the tariff rate. In this case, is a tariff which gives rise to an import level which, in turn, set as a quota, gives rise to an implicit tariff which is unequal to the tariff but equal to the implicit tariff under the tariff situation itself to be regarded as equivalent to that quota? In the original analysis, which treated only cases where the tariff situation was characterized by a discrepancy between the c.i.f. import price and domestic price (and hence an implicit tariff) which could not depart from the explicit tariff, this question could not arise. It arises directly in the Yadav
Publication Year: 2016
Publication Date: 2016-01-01
Language: en
Type: article
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Cited By Count: 7
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