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    Title: Tariff Escalation and Vertical Market Structure
    Authors: Hong Hwang;Chao-Cheng Mai;Shih-Jye Wu
    Date: 2018-01
    Issue Date: 2018-03-09 12:10:41 (UTC+8)
    Abstract: Many empirical studies have shown that most countries in the world reveal a specific form of tariff structure, referred to as tariff escalation, which is defined as tariff rates for final products being higher than those for intermediate goods, and the latter are higher than those for raw materials. However, trade theorists have paid scant attention to the causes of tariff escalation. To fill this gap, we set up a vertically related market model with n stages of successive monopolies. We find that a tariff on an imported good can be used to extract not only the profit of the foreign monopolist supplying this good, but also the rents acquired by all the foreign upstream monopolists through its effects on the prices of the upstream intermediate goods. Thus, as the number of production stages in the foreign country increases, the amount of rent captured by the foreign upstream producers rises and a higher tariff rate is therefore needed to extract the rent. This provides a theoretical explanation to the cause of tariff escalation.
    Relation: The World Economy 40(8), p.1597-1613
    DOI: 10.1111/twec.12414
    Appears in Collections:[產業經濟學系暨研究所] 期刊論文

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