A Note on the Condition for Optimum Tariff and Subsidy

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  • Note on the Condition for Optimum Tarif

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In a simplified case, criteria for optimum tariff (subsidy) by Brander and Spencer and by Jones are equivalent to each other and the Metzler paradox cannot occur. In a more general case with general equilibrium income effects of tariff, a necessary condition for the Metzler paradox is that importables must be strongly inferior and/or the tariff can reduce extremely the slope of the demand curve. So we may safely rule it out under the normal goods assumption.

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  • 経済と経営

    経済と経営 21 (3), 505-513, 1991-01-30

    札幌 : 札幌大学経済・経営学会

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