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Trade liberalization and shadow prices in the presence of tariffs and quotas
Neary, J. Peter
This paper examines the welfare effects of partial trade liberalization when trade is restricted by tariffs, quotas or some combination of both instruments. Rules for optimal first- and second-best intervention are derived and illustrated (using a new geometric technique) in both small and large open economies. A general expression for shadow prices of factors of production, which applies in both small and large economies, with or without quotas, is also derived. Welfare paradoxes are possible whenever exogenous changes raise (lower) imports of goods subject to trade restrictions which are below (above) optimal levels. A hard copy is available in UCD Library at GEN 330.08 IR/UNI
Keyword(s): Welfare economics; Free trade--Econometric models; Commercial policy
Publication Date:
2009
Type: Working paper
Peer-Reviewed: Unknown
Language(s): English
Institution: University College Dublin
Publisher(s): University College Dublin. School of Economics
File Format(s): other; application/pdf
First Indexed: 2012-08-25 05:22:23 Last Updated: 2018-10-11 15:43:55