| Publications [#239156] of Edward Tower
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- Kaempfer, WH; Tower, E; Willett, TD, "The Employment Maximizing Import Quota Under Domestic Monopoly",
Journal of International Logistics and Trade, vol. 1 no. 1
(2003),
pp. 22 [pdf]
(last updated on 2024/08/25)
Abstract: We consider a domestic monopolist who is protected by an
import quota on the product he produces. He faces a
domestic demand curve which is characterized by a constant
price elasticity. He is unable to export and has an upward
sloping marginal cost curve. We demonstrate that in this
case his employment of labor rises with the import quota
until imports rise to a fraction 1/e of domestic output
where e is the elasticity of domestic demand. Thus, the
employment maximizing quota sets permissible imports at a
fraction of domestic output which is at least as high as
the reciprocal of the elasticity of demand. We also make a
case for liberalizing all the way right away, “cold turkey
liberalization.”
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