Optimal Countervailing Intervention
Document Type
Article
Publication Date
9-1-1987
Identifier/URL
40858380 (Pure)
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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.
Repository Citation
Dung, T. H.
(1987). Optimal Countervailing Intervention. International Economic Journal, 1 (3), 19-29.
https://corescholar.libraries.wright.edu/econ/355
