Optimal policy intervention to reduce import dependence

Date

1987

Authors

Nettle, Richard S.
Britten-Jones, Mark
Anderson, Kym

Journal Title

Journal ISSN

Volume Title

Publisher

Taylor & Francis (Routledge)

Abstract

Should a country wish to reduce its dependence on imports of a certain commodity, an import tariff is typically recommended as the first-best (lowest-cost) policy instrument for achieving this non-economic objective. This note shows that while this is correct if the objective is to restrain imports to a certain quantity, it is not correct if the target is to reduce imports to a certain percentage of domestic consumption. In the latter case, a tariff-funded subsidy to producers is also required, the extent of which is larger the smaller the domestic price elasticities of demand and supply for the commodity.

Description

Keywords

import, tariff, policy, price, elasticities, domestic

Citation

Source

International Economic Journal

Type

Journal article

Book Title

Entity type

Access Statement

License Rights

Restricted until