Trade Policy with Heterogeneous Traders: Do Quotas Get a Bum Rap?

Author: Ms. Kala Krishna and Ms. Ling Hui Tan

Volume/Issue: Volume 2007 Issue 092

Publication date: April 2007

ISBN: 9781451866568

$20.00

Add to Cart by clicking price of the language and format you'd like to purchase

Available Languages and Formats


English

Prices in red indicate formats that are not yet available but are forthcoming.

Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Exports and Imports , Taxation - General , WP , free trade , supply price , average cost , trade policy , tariffs , quotas , firm heterogeneity , entry , quota license , quota rent , free trade equilibrium , import equivalent , market clearing price , auction quota , quota allocation scheme , license price , specific tariff , Trade liberalization , Imports , Import quotas , Asia and Pacific

Also of interest

Private Participation and its Discontents: Insights from Large-Scale Surveys

Public Investment Management Bottlenecks in Low-income Countries

Central Bank Digital Currencies and Financial Stability: Balance Sheet Analys...

Demand for Ethanol Considering Spatially Differentiated Fuel Retailers

Summary

This paper considers the effects of trade policy-tariffs and quotas-when importing is done by competitive traders who are identical ex ante but differ ex post. We show that the standard equivalence results no longer hold and the conventional ranking of tariffs and quotas is turned on its head: quotas are not as bad for welfare as previously believed, while tariffs may restrict trade by more than originally intended. Furthermore, the allocation of property rights (quota licenses) has real effects beyond the distribution of rents; this, in turn, has implications for the effects of corruption on welfare.