Uniform versus Discriminatory Tariffs: When Will Export Taxes Be Used?

This paper examines the noncooperative interactions between two exporting countries and one importing country when all of them are seeking the optimal policies to improve their welfare. Whereas the importing country has the incentive to impose tariffs on the goods coming from the two exporting countries, the export policies chosen by the exporting countries depend on the tariff regime, whether uniform or discriminatory tariffs are used. It is argued that export taxes are chosen by both exporting countries in some cases, and that whereas the importing country prefers a uniform tariff regime, the exporting countries find a discriminatory tariff regime preferable.