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Welfare versus Market Access: The Implications of Tariff Structure for Tariff Reform

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Author Info
James E. Anderson () (Boston College)
J. Peter Neary (University College Dublin)

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Abstract

We show that the effects of tariff changes on welfare and import volume can be fully characterised by their effects on the generalised mean and variance of the tariff distribution. Using these tools, we derive new results for welfare- and market-access-improving tariff changes, which imply two "cones of liberalisation" in price space. Because welfare is negatively but import volume positively related to the generalised variance, the cones do not intersect, which poses a dilemma for trade policy reform. Finally, we show that generalised and trade-weighted moments are mutually proportional when the trade expenditure function is CES.

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Publisher Info
Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 601.

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Length: 46 pages
Date of creation: 01 Aug 2004
Date of revision:
Handle: RePEc:boc:bocoec:601

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Related research
Keywords: Concertina rule; Market access; Piecemeal policy reform; Tariff moments; Uniform tariff reductions.;

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Find related papers by JEL classification:
F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
F15 - International Economics - - Trade - - - Economic Integration

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Fukushima, Takashi, 1979. "Tariff Structure, Nontraded Goods and Theory of Piecemeal Policy Recommendations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 427-35, June. [Downloadable!] (restricted)
  2. Feenstra, R.C., 1995. "Estimating the Effects of Trade Policy," Papers 95-10, California Davis - Institute of Governmental Affairs.
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  3. Diewert, W E & Turunen-Red, A H & Woodland, A D, 1989. "Productivity- and Pareto-Improving Changes in Taxes and Tariffs," Review of Economic Studies, Blackwell Publishing, vol. 56(2), pages 199-215, April. [Downloadable!] (restricted)
  4. Hiau Looi Kee & Nicita, Alessandro & Olarreaga, Marcelo, 2004. "Import demand elasticities and trade distortions," Policy Research Working Paper Series 3452, The World Bank. [Downloadable!]
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  5. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, 05. [Downloadable!] (restricted)
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  6. Neary, J Peter, 1995. "Trade Liberalisation and Shadow Prices in the Presence of Tariffs and Quotas," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(3), pages 531-54, August. [Downloadable!] (restricted)
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  7. Joseph Francois & Will Martin, 2003. "Formula Approaches for Market Access Negotiations," The World Economy, Blackwell Publishing, vol. 26(1), pages 1-28, January. [Downloadable!] (restricted)
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  8. Neary, J Peter, 1998. " Pitfalls in the Theory of International Trade Policy: Concertina Reforms of Tariffs, and Subsidies to High-Technology Industries," Scandinavian Journal of Economics, Blackwell Publishing, vol. 100(1), pages 187-206, March. [Downloadable!] (restricted)
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  9. Kyle Bagwell & Robert W. Staiger, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March. [Downloadable!] (restricted)
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  10. Anderson, James E & Neary, J Peter, 1996. "A New Approach to Evaluating Trade Policy," Review of Economic Studies, Blackwell Publishing, vol. 63(1), pages 107-25, January. [Downloadable!] (restricted)
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  11. Francois, Joseph F. & Martin, Will, 2004. "Commercial policy variability, bindings, and market access," European Economic Review, Elsevier, vol. 48(3), pages 665-679, June. [Downloadable!] (restricted)
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  12. Bruno, Michael, 1972. "Market Distortions and Gradual Reform," Review of Economic Studies, Blackwell Publishing, vol. 39(3), pages 373-83, July. [Downloadable!] (restricted)
  13. Hatta, Tatsuo, 1977. "A Theory of Piecemeal Policy Recommendations," Review of Economic Studies, Blackwell Publishing, vol. 44(1), pages 1-21, February. [Downloadable!] (restricted)
  14. Ju, Jiandong & Krishna, Kala, 2000. "Welfare and market access effects of piecemeal tariff reform," Journal of International Economics, Elsevier, vol. 51(2), pages 305-316, August. [Downloadable!] (restricted)
  15. Anderson, James E, 1995. "Tariff-Index Theory," Review of International Economics, Blackwell Publishing, vol. 3(2), pages 156-73, June.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Kee, Hiau Looi & Nicita, Alessandro & Olarreaga, Marcelo, 2006. "Estimating trade restrictiveness indices," Policy Research Working Paper Series 3840, The World Bank. [Downloadable!]
    Other versions:
  2. Jean, Sebastien & Laborde, David & Martin, Will, 2008. "Choosing sensitive agricultural products in trade negotiations:," IFPRI discussion papers 788, International Food Policy Research Institute (IFPRI). [Downloadable!]
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  3. Javorcik, Beata S. & Narciso, Gaia, 2007. "Differentiated products and evasion of import tariffs," Policy Research Working Paper Series 4123, The World Bank. [Downloadable!]
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  4. Rod Falvey & Udo Kreickemeier, 2009. "Tariff reforms with rigid wages," Economic Theory, Springer, vol. 41(1), pages 23-39, October. [Downloadable!] (restricted)
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  5. Hiau Looi Kee & Nicita, Alessandro & Olarreaga, Marcelo, 2004. "Import demand elasticities and trade distortions," Policy Research Working Paper Series 3452, The World Bank. [Downloadable!]
    Other versions:
  6. Kreickemeier, Udo & Raimondos-Møller, Pascalis, 2006. "Tariff-Tax Reforms and Market Access," CEPR Discussion Papers 5889, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  7. Kreickemeier, Udo & Raimondos-Møller, Pascalis, 2006. "Concertina Reforms with International Capital Mobility," CEPR Discussion Papers 5888, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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