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Optimal Commercial Policy under Increasing Returns to Scale with Sectorspecific Capital

Optimal Commercial Policy under Increasing Returns to Scale with Sectorspecific Capital Recent studies on the welfare implications of internationallymobile capital for a country employing commercial policy have beenrestricted to constantreturnstoscale CRS production models. It isgenerally concluded that the pursuit of such policies iswelfaredecreasing under CRS conditions. The analysis to encompassvariablereturnstoscale VRS is generalised and it is shown thatthere is an optimal second best combination of import tariff andforeign capital subsidy that will not be immiserising foran increasingreturnstoscale IRS industry. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Studies Emerald Publishing

Optimal Commercial Policy under Increasing Returns to Scale with Sectorspecific Capital

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0144-3585
DOI
10.1108/01443589110004055
Publisher site
See Article on Publisher Site

Abstract

Recent studies on the welfare implications of internationallymobile capital for a country employing commercial policy have beenrestricted to constantreturnstoscale CRS production models. It isgenerally concluded that the pursuit of such policies iswelfaredecreasing under CRS conditions. The analysis to encompassvariablereturnstoscale VRS is generalised and it is shown thatthere is an optimal second best combination of import tariff andforeign capital subsidy that will not be immiserising foran increasingreturnstoscale IRS industry.

Journal

Journal of Economic Studies – Emerald Publishing

Published: Feb 1, 1991

References