Lerner Symmetry: A Modern Treatment
Name
aeri.20170006.pdf
Description
Published version
Size
526.71 KB
Format
Adobe PDF
Checksum (MD5)
17a3c1ac59b984b4655e3003e69ad15f
Author(s)
Costinot, Arnaud
Werning, Iván
Date Issued
2019
Journal
American Economic Review: Insights
Publisher
American Economic Association
Version
Final published version
Abstract
Which policies are protectionist and which ones are not? The Lerner Symmetry Theorem establishes that import tariffs and export taxes are equally protectionist. In this paper we provide a modern treatment of this classical result, highlighting the importance of multinational firms, global imbalances, and imperfect competition. Under perfect competition, the result follows from the separability of consumption and production across countries, ruling out tourism and some forms of multinational firms, but not others. Though we do not require trade balance, the role of initial assets is subtle: our result rules out foreign ownership of domestic assets, but does not constrain domestic ownership of foreign assets. Under imperfect competition, our result effectively rules out all multinational firms. We conclude by discussing the implications for border adjustment taxes. (JEL D41, D43, F13, F14, F23)
MIT Department
Massachusetts Institute of Technology. Department of Economics
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1257/AERI.20170006
