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Article
The Optimal Tariff, Production Lags, and Time Consistency
The American Economic Review
  • Harvey E. Lapan, Iowa State University
Document Type
Article
Publication Version
Published Version
Publication Date
6-1-1988
Abstract
The optimal tariff for a large country equals the reciprocal of the foreign export elasticity of supply. However, if production decisions occur before consumption decisions, the ex ante optimal tariff is not time consistent because the ex post elasticity is less than the ex ante elasticity. We show all countries are worse off if the large country cannot precommit to its ex ante optimal tariff, and that all countries can gain if the large country taxes domestic production of importables.
Comments

This is an article from The American Economic Review 78 (1988): 395. Posted with permission.

Copyright Owner
American Economic Association
Language
en
File Format
application/pdf
Citation Information
Harvey E. Lapan. "The Optimal Tariff, Production Lags, and Time Consistency" The American Economic Review Vol. 78 Iss. 3 (1988) p. 395 - 401
Available at: http://works.bepress.com/harvey-lapan/49/