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Effective Protection Analysis and Optimal Trade Policy with Intra-Industry Specialisation and Imperfect Competition

In: Intra-Industry Trade

Author

Listed:
  • David Greenaway
  • Chris Milner

Abstract

The effective tariff concept is well established in the theoretical literature in the analysis of inter-industry trade flows. This analysis is based upon assumptions such as product homogeneity, non-increasing returns, arms-length trade, and small open economy conditions. Relaxation of some or all of these assumptions has direct implications for effective protection analysis under any type of trade flows.1 As is now widely recognised however, relaxation of these assumptions is also likely to be associated with intra-industry specialisation and exchange. There is a large literature on the effects of nominal tariffs in this context.2 There is, by contrast, a paucity of studies on effective protection in the context of intra-industry trade.3 This chapter, therefore, seeks to redress this balance, and to employ effective protection analysis under conditions of ‘within-industry’ specialisation (horizontal and vertical) and of imperfect competition.

Suggested Citation

  • David Greenaway & Chris Milner, 1989. "Effective Protection Analysis and Optimal Trade Policy with Intra-Industry Specialisation and Imperfect Competition," Palgrave Macmillan Books, in: P. K. M. Tharakan & Jacob Kol (ed.), Intra-Industry Trade, chapter 8, pages 145-162, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-1-349-10464-2_8
    DOI: 10.1007/978-1-349-10464-2_8
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