THE LIBERALIZATION OF TARIFF RATE QUOTAS UNDER OLIGOPOLISTIC COMPETITION

The paper develops a two-stage capacity constrained model, in which the mode of competition is endogenous and the constraint is flexible, to investigate the impact of Tariff Rate Quotas (TRQs) and of different liberalization options in oligopolistic markets. The model predicts that the equilibrium moves from a pure Bertrand outcome to a Cournot outcome as the effectiveness of the capacity constraint increase, that is, as the gap between the cost of the licences plus the in-quota tariff and the out-of-quota tariff increases. The results show that the impacts of the various liberalization options - the expansion of quotas by means of an increase in the number of operators or in the quota allocated to incumbents, the reduction in the in-quota and out-of-quota tariffs and improvements in the TRQ administration system - are rather diverse from those predicted by models assuming perfect competition.


Issue Date:
Nov 13 2008
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/44822
JEL Codes:
Q18; F13; L13
Note:
Paper removed by author for revision 12/09/08.
Series Statement:
3.2.5




 Record created 2017-04-01, last modified 2017-08-25


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