Tariffs Ranking in Mixed Oligopoly with Revenue Constraint

Abstract EN

Utilizing linear mixed oligopoly model, this paper explores the magnitude of the maximum-revenue tariff, optimum-welfare tariff, and revenue-constrained optimal tariff that is especially designed for the consideration of the bureaucratic inefficiency.

In particular, the tariff ranking issue is examined under both cases of Cournot competition and domestic public leadership.

We found that, under Cournot competition, the optimum-welfare tariff is the highest and it is followed by the revenue-constrained optimal tariff while the maximum-revenue tariff is the lowest.

But, under Stackelberg public leadership, if the domestic private firms are fewer than the foreign firms, the maximum-revenue tariff becomes the highest and the optimum-welfare exceeds the revenue-constrained optimal tariff.