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Relative Incentives and Trade Strategies: Typologies and Possibilities

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  • Milner, Chris

Abstract

This paper investigates trade strategy classification within a general equilibrium framework which includes both tradeables and nontradeables. In a three-sector model there is apparently a wider range of trade strategies available than in the traditional two-sector model. Besides pure import-substitution and export-promotion policies, mixed import substitution/export promotion policies might seek (ex ante) to create a protradeables bias rather than approximate neutrality. However, the ex post outcome depends upon the substitution, complementarity, and/or income effects of commercial policies on equilibrium relative prices. The paper demonstrates that the actual change in the incentive structure may differ from the intended strategy. Copyright 1995 by The Economic Society of Australia.

Suggested Citation

  • Milner, Chris, 1995. "Relative Incentives and Trade Strategies: Typologies and Possibilities," The Economic Record, The Economic Society of Australia, vol. 71(214), pages 230-239, September.
  • Handle: RePEc:bla:ecorec:v:71:y:1995:i:214:p:230-39
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    Cited by:

    1. Milner, Chris & Zgovu, Evious, 2006. "A natural experiment for identifying the impact of 'natural' trade barriers on exports," Journal of Development Economics, Elsevier, vol. 80(1), pages 251-268, June.

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