Domestic Purchase Requirement

Item Type Conference or Workshop Item (Paper)

We consider the problem of allocating a tariff-rate quota among a small number of firms which act as middlemen between competitive producers and atomistic consumers and can import a perfect substitute at a fixed world price. We compare the traditional license-on-demand regime to administer such quotas with a domestic purchase requirement under which each firm is allocated a share of the quota that depends on the share of the total quantity bought from domestic suppliers. We give conditions such that the domestic purchase requirement strictly welfare-dominates the license system. Moreover, we show that for any binding import quota the welfare maximizing number of firms is finite

Authors Häfner, Samuel & Lengwiler, Yvan
Language English
Subjects economics
HSG Classification contribution to scientific community
HSG Profile Area SEPS - Quantitative Economic Methods
Date 2019
Publisher DOI 10.2139/ssrn.3293534
Official URL
Depositing User Samuel Häfner
Date Deposited 04 Oct 2019 10:06
Last Modified 04 Oct 2019 10:45


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Häfner, Samuel & Lengwiler, Yvan: Domestic Purchase Requirement. 2019.

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