Wasteful Trade Barriers in Oligopoly

Kamei, Keita and Inomata, Kentaro (2022): Wasteful Trade Barriers in Oligopoly.

Abstract

Trade barriers can exist variably and are not just limited to tariffs. Based on a bilateral trade model under international oligopolistic competition, we show that governments endogenously determine red-tape barriers (RTBs), which are trade barriers caused by wasteful administrative procedures. We also find that RTBs can have the opposite reaction to tariffs. Particularly, we find that the fall in the RTB level can be larger than the rise in tariffs (backlash effects). Finally, in the case of a coordinated tariff rate increase under a free trade agreement between the two countries, it is shown that an increase in tariffs can improve consumer surplus, producer surplus, and government income and expenditure.

• Item Type: MPRA Paper
• Language: English
• Keywords: red-tape barriers(RTBs), oligopolistic competition, tariff, backlash, welfare analysis.
• Subjects: F - International Economics > F1 - Trade > F13 - Trade Policy ; International Trade Organizations; F - International Economics > F1 - Trade > F19 - Other

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