Long-run analysis overstates optimal tariffs by 50 percent!
Optimal Tariff: Welfare vs Long-run
Long-run analysis overstates optimal tariffs by 50 percent!
Optimal Tariff: Welfare vs Long-run
The above figure compares the optimal unilateral tariff and welfare (including the transition) against the steady-state utility maximizing tariff for several variations of the model in Alessandria, Ding, Khan, and Mix. Welfare and steady state utility are based on the compensating variation in consumption.
George Alessandria (Google Scholar) (Vita) (Family Tree) (Repec Geneaology)
George.Alessandria@rochester.edu
Professor of Economics
Department of Economics
University of Rochester