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Title: |
Optimal Countervailing Intervention |
| Author: |
Dung, Tran Huu |
| Author
Affiliation: |
Wright State U |
| Source: |
International Economic Journal, Autumn 1987, v. 1, no. 3, pp. 19-29 |
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Publication Date: |
Autumn 1987 |
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Abstract: |
This paper examines the optimal
countervailing measures in response to foreign subsidy. Two alternative
objectives are considered: (1) to maintain the domestic producer price,
or (2) to maintain the initial import level. Three different instruments
are discussed: a tariff, a production subsidy, and a consumption tax.
Their rankings in terms of welfare costs are established. One important
finding is that, contrary to present convention, the optimal
countervailing rate may have to exceed the foreign subsidy rate. |
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