This paper analyzes the effects and desirability of tariffs, quotas and quality controls, when the quality of the imported good is endogenous, and the foreign producer is a monopolist. A crucial determinant of the direction of these effects is shown to be the valuation of increments in quality by the marginal consumer, relative to that of all consumers on average. A way of comparing infinitesimal equivalent policies is developed and used to compare import equivalent policies.
All Science Journal Classification (ASJC) codes
- Economics and Econometrics