How protectionism harms workers under oligopoly

Arbeitspapier

I study welfare and distributional effects of import tariffs in a two-country asymmetric general oligopolistic equilibrium trade model. Tariffs have an anti-competitive effect that reduces labor demand because firms want to shorten supply. Unilaterally increasing the import tariff in absence of foreign retaliation raises domestic welfare at the foreign country's expense, but comes at the cost of favoring profit recipients as compared to workers, whose real wages fall. Only if initial symmetric tariffs are low, the tariff-increasing government could use its rising tariff revenue to neutralize the distributional effect or the negative effect on workers, an action the other country could never take because its tariff revenue declines. If supporting workers is the policy objective, tariffs do not appear to be a suitable tool under oligopoly and need to be accompanied by transfer payments or even profit taxation.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: cege Discussion Papers ; No. 407

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Trade Policy; International Trade Organizations ; Aggregate Factor Income Distribution ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Labor Demand ; Oligopoly and Other Imperfect Markets
• Thema: Trade Policy ; labor share ; general oligopolistic equilibrium ; labor demand ; strategic trade

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Rudsinske, Jonas F.
• Ereignis: Veröffentlichung
• (wer): University of Göttingen, Center for European, Governance and Economic Development Research (cege)
• (wo): Göttingen
• (wann): 2020

Weitere Informationen

• Handle: http://hdl.handle.net/10419/225292
• Letzte Aktualisierung: 10.03.2025, 11:42 MEZ