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Export-promoting Protection: Endogenous Monopoly and Price Disparity

Jagdish Bhagwati
The Pakistan Development Review
Vol. 27, No. 1 (Spring 1988), pp. 1-5
Stable URL: http://www.jstor.org/stable/41259347
Page Count: 5
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Export-promoting Protection: Endogenous Monopoly and Price Disparity
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Abstract

This note shows that protection-induced export promotion can arise even in the absence of economies of scale, which have been long analysed as factors sliding an import-substituting industry up the scale of comparative advantage and turning it into an exporter eventually. Even with an upward-eloping marginal-cost curve, a domestic monopolist can be protected and could then charge discriminatory prices in domestic and export markets, thus becoming an exporter whereas free trade would have destroyed the monopoly and led to imports instead.

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