Optimal Tariffs: Should Australia Cut Automotive Tariffs Unilaterally?

• Autores: PETER B. DIXON, MAUREEN T. RIMMER
• Localización: Economic record, ISSN 0013-0249, Vol. 86, Nº. 273, 2010, págs. 143-161
• Idioma: inglés
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• Resumen

  • We derive formulas for the optimal tariff rate in four theoretical models. We start with a model in which industries are competitive and then successively allow for: monopoly pricing by export industries, revenue-replacement costs and cold-shower effects. The theoretical formulas accurately explain results from MONASH, a detailed computable general equilibrium model. A critical parameter in determining the optimal tariff is the export-demand elasticity. Modellers are often reluctant to adopt empirically justifiable values for export-demand elasticities because such values generate embarrassingly large optimal tariff rates. A way out of this dilemma is the adoption of a non-linear cold-shower specification.