The New Palgrave Dictionary of Economics

Living Edition
| Editors: Palgrave Macmillan

Optimal Tariffs

  • John Pomery
Living reference work entry

Later version available View entry history

First Online:
Received:
Accepted:
DOI: https://doi.org/10.1057/978-1-349-95121-5_1875-1
How to cite

Abstract

In the field of international economics, a tariff is a tax levied on each unit of some category of goods or services as that unit is transacted across the national boundary of the tariff-levying country. A tariff (structure) is said to be optimal if it is a (set of) trade tax(es) which maximizes some measure of national welfare for the tariff-levying country, given the constraints facing that country’s national government as it chooses the tariff level(s). Optimality is defined from the perspective, sometimes myopic, of the tariff-levying country; the particular model defines precisely what is meant by an optimal tariff. A basic theme of the optimal tariff literature is manipulation, which in simpler models takes the form of governmental trade intervention to exert national monopoly/monopsony power. This concept of an optimal tariff can be applied to numerous models; extensions may involve second-best theory, issues of strategy, political behaviour and/or constitutional aspects.

Keywords

Home Country World Prex Optimal Tariff Home Government Tariff Revenue 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.
This is a preview of subscription content, log in to check access.

Bibliography

  1. Bhagwati, J.N. 1971. A generalized theory of distortions and tariffs. In Trade, balance of payments, and growth: Papers in international economics in honor of Charles. P. Kindleberger, ed. J.N. Bhagwati, R.A. Mundell, R.W. Jones and J. Vanek, Amsterdam: North-Holland, ch. 4, 69–90.Google Scholar
  2. Bickerdike, C.F. 1906. The theory of incipient taxes. Economic Journal 16: 529–535.CrossRefGoogle Scholar
  3. Edgeworth, F.Y. 1908. Appreciations of mathematical theories III. Economic Journal 18: 392–403.CrossRefGoogle Scholar
  4. Johnson, H.G. 1954. Optimum tariffs and retaliation. Review of Economic Studies 21(2): 142–153.CrossRefGoogle Scholar
  5. Kaldor, N. 1940. A note on tariffs and the terms of trade. Economica 7: 377–380.CrossRefGoogle Scholar
  6. MacDougall, G.A.D. 1960. The benefits and costs of private investment from abroad: A theoretical approach. Economic Record 36(73): 13–35.CrossRefGoogle Scholar
  7. Mayer, W. 1984. Endogenous tariff formation. American Economic Review 74(5): 970–985.Google Scholar
  8. Ramaswami, V.K. 1968. International factor movements and the national advantage. Economica 35: 309–310.CrossRefGoogle Scholar
  9. Scitovsky, T. 1942. A reconsideration of the theory of tariffs. Review of Economic Studies 9(2): 89–110.CrossRefGoogle Scholar

Copyright information

© The Author(s) 1987

Authors and Affiliations

  • John Pomery
    • 1
  1. 1.