Can Import Protection Become Export Promotion?
Author InfoChris Stefanadis Abstract The argument that import protection can become export promotion is examined from the marketing standpoint. The cornerstone of the analysis is the presence of horizontal differentiation. In the model, protection by the home government allows domestic firms to sell their products to the portion of the home market that was previously served by foreign firms; the new product space “locations” chosen by domestic firms are closer to the tastes of mainstream foreign consumers. Hence, protection in the home market may allow domestic producers to capture a larger market share and earn more profits in export markets than they otherwise would. Another finding of the model is that a free trade regime does not necessarily lead to the socially optimal product space “locations”; in this resepct, the world welfare maximum may involve positive tariffs. Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are
