TY  - JOUR
AU  - Brander,James A.
AU  - Spencer,Barbara J.
TI  - Trade Warfare:  Tariffs and Cartels
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1193
PY  - 1983
Y2  - August 1983
UR  - http://www.nber.org/papers/w1193
L1  - http://www.nber.org/papers/w1193.pdf
N1  - Author contact info:
James A. Brander
University of British Columbia
Faculty of Commerce
2053 Main Mall
Vancouver, B.C. V6T 1Z2  CANADA
Tel: 604/822-8483
Fax: 604/822-8477
E-Mail: brander@sauder.ubc.ca

Barbara J. Spencer
University of British Columbia
Sauder School of Business
2053 Main Mall
Vancouver, BC  V6T 1Z2
CANADA
Tel: 604/822-8479
Fax: 604/822-8477
E-Mail: barbara.spencer@sauder.ubc.ca
AB  - National governments have incentives to intervene in international markets, particularly in encouraging export cartels and in imposing tariffs on imports from imperfectly competitive foreign firms. Although the optimal response to foreign monopoly is usually a tariff, a specific subsidy will be optimal if demand is very convex, as with constant elasticity demand. If ad valorem tariffs or subsidies are considered, a subsidy is optimal if the elasticity of demand increases as consumption increases.The critical conditions in both ad valorern and specific cases hold generally for Cournot ologopoly. Noncooperative international policy equilibrium will be characterized by export cartels and rent-extracting tariffs.
ER  -