International Income Transfer under Imperfect Competition

This paper examines the effects of an international income transfer under international monopoly. One of the markets in the donor country is monopolized and there exist two distinct types of agent: monopolist and factor owners. The transfer is provided by the agents with different lump sum tax (burden‐share) rates. The burden‐share rate plays a key role concerning the welfare effects of a transfer. We show that the government of the donor country can raise both its social welfare and the wellbeing of the recipient country by providing a further transfer and by simultaneously adjusting the burden‐share rates.