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Tariff Reform in the Presence of Sector-specific Distortions

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  • BEGHIN, JOHN C
  • Karp, Larry

Abstract

The problem of choosing second-best trade policies is modified by including sector-specific policies as well as tariffs. We obtain conditions under which reduction of the largest tariff is welfare improving. Formulae for the optimal tariff and sector-specific subsidy are used to study the design of optimal policy menus. The theory is illustrated by an empirical general equilibrium model of the U. S. economy which emphasizes agriculture. The model suggests that reductions in agricultural protection in the United States would be welfare improving.

Suggested Citation

  • BEGHIN, JOHN C & Karp, Larry, 1990. "Tariff Reform in the Presence of Sector-specific Distortions," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt4n52q5mn, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt4n52q5mn
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    Cited by:

    1. Karp, Larry, 1997. "A Neoclassical View of Trade Liberalization," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt13f2q378, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Karp, Larry, 1997. "A Neoclassical View of Trade Liberalization," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt13f2q378, Department of Agricultural & Resource Economics, UC Berkeley.

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