ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Effect of Tariffs on Foreign Prices-The Case of India

The Case of India R G Nambiar Rajesh Mehta There appears to be an asymmetrical link between tariff rates and prices to this country relative to prices to the rest of the world. The latter has a tendency to be low when tariff is high and conversely tend to be high when tariff is low. One important implication of this is that substantial tariff reductions in the presence of imperfections in the world market are suspect; the foreign producer would rob some, if not all, of the benefits of such tariff reductions. Instead, a rise in tariff might be rightly placed; it would exert pressure upon the foreign producer to absorb the tariff hike.

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