STRATEGIC INPUT OUTSOURCING AND TARIFF POLICY

• Main Author: Damiana Simanjuntak
• Other Authors: Wen-Jung Liang
• Format: Others
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/98f8w4

碩士 === 國立東華大學 === 經濟學系 === 104 === This thesis constructs a three-firm trade model to examine the strategic tariff policy of the domestic country, when the foreign firm strategically outsources the entire quantity of its input production to the supplier with an input price higher than its in-house cost. The result shows that the social welfare is higher under in-house production than under outsourcing at a certain range of tariff. Thus, the domestic government can induce the foreign firm to choose in-house production by setting the tariff at this range, while considering that the tariff must meet the foreign firm’s requirement to switch from outsourcing to in-house production. Moreover, this tariff can be negative i.e., a subsidy if the foreign firm’s marginal cost is sufficiently high.