Original Article
Tariff Escalation and De-escalation: The Role of Market Structure
First published: 25 April 2019
Abstract
We adopt the conjectural variations approach to explore the rationale for tariff escalation and de-escalation. The main findings indicate that it is a welfare maximization choice for the importing country to adopt an escalated, unified and/or de-escalated tariff scheme; nevertheless, the escalated tariff scheme is more likely to be chosen, while a unified tariff is the least likely to be adopted. Both potential market size and market structure in the importing country play essential roles for government to make choices.
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