On the Equivalence of Content Protection Scheme and X-equivalent Tariff
| Published date | 01 February 2016 |
| Author | Joysri Acharyya |
| DOI | 10.1177/0015732515614435 |
| Date | 01 February 2016 |
| Subject Matter | Articles |
On the Equivalence of
Content Protection
Scheme and
X-equivalent Tariff
Joysri Acharyya1
Abstract
This article examines the welfare equivalence of alternative modes of protection
for the domestic input producers in duopolistic environment when tariffication
is adopted in the input tier. We use the definition of equivalence introduced by
Vousden (1987). In contrast to Vousden (1987), we find that when the final good
producers have Cournot conjectures, a content protection scheme (CPS) may
be more efficient in respect of both protection and social welfare compared to
the X-equivalent tariff or not depending on the value of the parameters.
JEL: F12, F13
Keywords
Protection, CPS, Cournot conjecture, Tariff, X-equivalent tariff
Introduction
This article examines the welfare equivalence of alternative modes of protection
for the domestic input producers. Trade liberalization in many countries has been
achieved sequentially. First, the physical import restrictions like quotas are
converted into equal-import tariffs, known as tariffication in the context of India’s
liberalization efforts in the 1990 for example. Afterwards, the tariff rates are
lowered sequentially. Evaluation of welfare equivalence of alternative modes of
protection for domestic input producers is relevant to shed lights on welfare gains
or losses from such a sequential or phased out liberalization episodes.
The full realization of the so-called gains from trade depends to a large extent
on the competitive forces. Whereas well functioning domestic factor markets
Foreign Trade Review
51(1) 1–12
©2016 Indian Institute of
Foreign Trade
SAGE Publications
sagepub.in/home.nav
DOI: 10.1177/0015732515614435
http://ftr.sagepub.com
Corresponding author:
Joysri Acharyya, Lady Brabourne College, P-1/2, Suhrawardy Avenue, Kolkata, India.
E-mail: joysri2010@gmail.com
1 Associate Professor, Department of Economics, Lady Brabourne College, Kolkata, India.
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