Tariff Uncertainty and the Firm's Decision to Invest

Abstract

The importance of uncertain future tariff levels as a neglected aspect of the Australian industrial environment is noted, and the seminal work of N.R. Norman in this area briefly referred to. A variational model is then built to corroborate the original conclusions of Norman, that tariff uncertainty adversely influences the investment behaviour of firms. It is claimed that, although broadly similar conclusions are reached, the model developed in the present paper is superior to Norman's formulation in several significant respects.