Tariffs and the most favored nation clause

• 成果类型: Article
• 署名作者: Saggi, K
• 署名单位: Southern Methodist University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(03)00057-6
• 发表日期: 2004
• 页码: 341-368
• 关键词: tariffs; Most favored nation clause; Trade policy; oligopoly; Intraindustry trade

摘要

In an n country oligopoly model of intraindustry trade (n greater than or equal to 3), this paper explores the economics of the most-favored-nation (MFN) principle. Under the non-cooperative tariff equilibrium, each country imposes higher tariffs on low cost producers relative to high cost ones thereby causing socially harmful trade diversion. MFN adoption by each country improves world welfare by eliminating this trade diversion. Under linear demand, MFN adoption by the country with the average production cost is most desirable. High cost countries refuse reciprocal MFN adoption with other countries and also lose even if others engage in reciprocal MFN adoption amongst themselves. (C) 2003 Elsevier B.V. All rights reserved.