Discussion Paper Details

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Title: Customs Union, Tariff Reform and Trade in Differentiated Products

Author(s): Anthony J Venables

Publication Date: January 1985

Keyword(s): Customs Union, Differentiated Products, Monopolistic Competition, Tariffs and Tax Policy

Programme Area(s): International Trade and Regional Economics

Abstract: The paper analyses tax and tariff policy for trade between economies which each contain a monopolistically competitive industry producing differentiated products. The consequences of tax changes by a single country are examined, and the general desirability of taxing imports more heavily than domestically produced goods is established. Customs union theory is analysed by studying coordinated tax changes by a group of countries; circumstances under which customs union formation and enlargement will benefit members are found. Game theoretic techniques are used to investigate which countries will coalesce into a customs union.

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Bibliographic Reference

Venables, A. 1985. 'Customs Union, Tariff Reform and Trade in Differentiated Products'. London, Centre for Economic Policy Research.