TY - JOUR
T1 - Optimal policies with strategic distortions
AU - Krishna, Kala
AU - Thursby, Marie
N1 - Funding Information:
*We are grateful to two anonymous referees, Mark Bagnoli, Richard Baldwin, Larry Blume, Elias Dinopoulos, Avinash Dixit, Allan Drazen, Roger Gordon, Gene Grossman, Richard Jensen, Peter Neary, Maury Obstfeld, Dani Rodrik, Barbara Spencer, Jay Wilson and participants of seminars at the North East Universities Development Consortium Conference, the NBER Summer Institute, Midwest International Economics Meetings, Columbia University, University of Kentucky, University of Pennsylvania, Purdue University, and December 1987 American Economic Association meetings for comments on a related paper. Krishna gratefully acknowledges research support from the Center for International Affairs at Harvard and the Clark Fund. Thursby gratefully acknowledges research support from the National Science Foundation under grant No. RII-860-0404 and the Ford Foundation.
PY - 1991/11
Y1 - 1991/11
N2 - This paper analyzes the jointly optimal levels of a variety of policy instruments when markets are imperfectly competitive. A targeting principle to identify optimal policies under imperfect competition is derived using the concept of a 'strategic distortion'. This allows us to interpret when trade policy is first best and links the literature on optimal policies with imperfect competition to the standard targeting literature. We show that optimal tax/subsidy policy depends crucially on the presence of other regulations and assumptions about market segmentation.
AB - This paper analyzes the jointly optimal levels of a variety of policy instruments when markets are imperfectly competitive. A targeting principle to identify optimal policies under imperfect competition is derived using the concept of a 'strategic distortion'. This allows us to interpret when trade policy is first best and links the literature on optimal policies with imperfect competition to the standard targeting literature. We show that optimal tax/subsidy policy depends crucially on the presence of other regulations and assumptions about market segmentation.
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U2 - 10.1016/0022-1996(91)90040-D
DO - 10.1016/0022-1996(91)90040-D
M3 - Article
AN - SCOPUS:0040950592
SN - 0022-1996
VL - 31
SP - 291
EP - 308
JO - Journal of International Economics
JF - Journal of International Economics
IS - 3-4
ER -