Unilateral and bilateral trade policies for a minimum-wage economy

This paper considers optimal commercial policy for a trading economy which departs from neo-classical characteristics only in that a minimum-wage constraint gives rise to unemployment. Although for a flexible-wage fully employed economy the Baldwin envelope yields dominant domestic production-cum-trade possibilities, unilateral imposition of an optimum tariff is shown not necessarily to be optimal commercial policy for the minimum-wage economy. Rather, there exists an envelope, derived from foreigners' trade indifference and attained via bilateral trade policy, which dominates the Baldwin envelope when the optimum tariff is zero (as Brecher has shown it can be for a minimum-wage economy), and can still yield superior production-cum-trade possibilities when the optimum tariff is non-zero.     

An extension of Bale's labor displacement cost estimates

Bale (1976) failed to extend his labor displacement cost estimates to the more interesting question of whether these costs outweigh gains from trade liberalization. This note addresses that question by applying Bale's estimates to Magee's (1972) study of the welfare effects of U.S. trade restrictions. Our results indicate that gains far outweigh costs of tariff removal on imports directly competing with U.S. production.     

National welfare in an open economy in the presence of foreign-owned factors of production

In the presence of foreign-owned factors of production in the economy, the effect of trade policy changes on national welfare needs to take into account the possible redistributive effect between foreign-owned and domestic factors. Therefore, an otherwise welfare-improving trade liberalization may paradoxically worsen national welfare. This paper analyzes this important, new area of trade theory and establishes the condition under which this paradox of immiserizing trade liberalization arises. The analysis is also applicable to analyzing the effects of external tariff variation in customs unions, with full internal factor mobility, on member countries' welfare.     

A reappraisal of strategic trade policies with the endogenous mode of competition under vertical structures

This paper examines the endogenous choice of competition mode with strategic export policies in vertically related markets when each upstream firm located in each country determines the terms of the two-part tariff contract by maximizing generalized Nash bargaining. We show that (i) choosing Cournot (Bertrand) competition is the dominant strategy for both downstream firms when goods are substitutes (complements), which leads Pareto superior regardless of the nature of goods under the optimal trade policies; (ii) irrespective of rival’s competition mode, the optimal trade policy is an export subsidy under Cournot competition and an export tax under Bertrand competition; and (iii) trade liberalization may give rise to changes of competition mode and increase of social welfare.     

Optimal trade,industrial, and privatization policies in a mixed duopoly with strategic managerial incentives

Abstract

This paper examines optimal trade, industrial, and privatization policies in a home-market model of mixed international duopoly with strategic managerial incentives. Under linear demand and constant marginal costs, the optimal degree of privatization is shown to depend crucially on cost and demand parameters and on the availability of strategic trade and industrial policies. If both firms are equally efficient, optimal trade and industrial policies drive out the foreign firm and the privatization policy loses its effect on national welfare; however, if the home firm is less efficient, then full privatization combined with an import tariff and a production subsidy is optimal for the home country, while an export subsidy is optimal for the foreign country. If trade and industrial policies are unavailable and if both firms are equally efficient, full state-ownership, which drives out the foreign firm, becomes optimal; however, if the home firm is less efficient, only partial privatization is optimal, The state-ownership share is increased if either the market size grows, the home firm's efficiency increases, or the foreign firm's efficiency decreases. Further, the paper demonstrates the potential conflict between privatization and trade liberalization policies.     

Economic imperialism and resource nationalism: Comment on Kemp and Ohyama

Kemp and Ohyama show that a self-seeking resource-poor imperial economy can use tariffs to completely exploit its resource-rich raw-material producing colonial trading partner, but that when capital is immobile, the colonial economy loses all power to exploit by means of ad valorem trade taxes. We use geometry to explain why, and demonstrate that there are other instruments (export quotas, import quotas, an export tariff specified in units of the import per unit of the export, and destruction of the raw material by the colonial economy's government) which may restore the colonial economy's ability to exploit the imperial one.     

Non-traded goods and optimal trade policy in a cash-in-advance economy

This paper develops a standard trade model of a small open monetary economy with two traded and one non-traded goods. Money is introduced through a generalized cash-in-advance constraint where the share of goods purchases that must be made using cash, varies across sectors. We find that free trade may be harmful so that alternative policy instruments may be considered to improve welfare. In addition, we study and compare the optimal tariff formula and the optimal consumption tax structure. In the presence of a monetary distortion of the non-traded good, a consumption tax may not Pareto dominate a tariff although the latter bears an additional production burden. This corroborates the theory of second best.     

Practical general equilibrium estimation of resource pulls under trade liberalization

This paper discusses the application of a model similar to the one developed in Leif Johansen's Multi-sectoral study of economic growth (1964) to the problem of determining general equilibrium responses of the economy to changes in commercial policy. This method amounts essentially to specifying a log-linear approximation to the general equilibrium solution for the economy, and solving the resulting linear equations for changes in endogenous variables as functions of exogenous variable changes. For a 35-sector model of the Chilean economy with labor as the only variable factor of production (to avoid the problem of overdetermination of many commodity price and output shifts when only two factors are considered in constant returns production functions), it is found that (i) the specification of the way in which intermediate inputs enter the production function is numerically important in determining output responses to tariff changes, detracting from the credibility of fixed coefficient effective rate of protection calculations if variable intermediate input coefficients are the rule (as appears likely empirically); (ii) exchange rate elasticities with respect to individual tariff changes are fairly large, so that the usual partial equilibrium assumption of exchange rate insensitivity to ‘small’ tariff revisions is not valid; (iii) employment effects of different tariff revisions are highly variable and in some cases substantial.     

The ranking of alternative tariff and quota policies in the presence of domestic monopoly

Bhagwati demonstrated the nonequivalence between tariffs and quotas in the presence of monopoly. This paper also assumes domestic production to be monopolized and shows that giving import licenses or tariff revenues to the domestic producer may raise or lower the welfare cost of protection and the price paid by consumers from the price under other tariff and quota arrangements which maintain the same market share for the domestic producer. However, if the monopolist realizes that commercial policy is an instrument used to maximize the policymaker's welfare function, instead of being a goal in itself, the equivalence of tariffs and quotas re-emerges.     

The welfare effect of tariff rate reductions in a many country world

Consider a two-commodity n-country model without inferior goods where import tariffs are the only trade barriers. In this paper we establish that the world's welfare is improved if the country with the highest tariff rate unilaterally reduce its rate to the level of the second highest country or if all the countries of the world reduce tariff rates proportionally. The second rule serves as a theoretical justification of the Kennedy and Tokyo Round Tariff Reductions.     

不完全竞争市场上的贸易和产业政策——以合成橡胶行业为例的经验分析

战略性贸易政策理论研究不完全竞争市场的贸易政策和产业政策。本文将该理论作为分析框架，以合成橡胶行业为分析对象，使用2003年的数据对我国在该行业实施贸易政策和产业政策进行经验分析。文章分析比较了4种不同的政策或政策组合，即自由贸易政策、进口关税政策、生产补贴政策、进口关税与生产补贴结合使用。研究发现，相对于自由放任政策，各种干预政策可增加国民福利，但幅度不大；而干预政策对不同行业厂商利润和政府收入的影响则要大得多，并使合成橡胶的数量和价格发生明显变化。最后，笔者考察了进口关税政策在多期的实施效果。研究结果支持传统幼稚工业保护论：贸易保护程度应随时间减弱，并且政策将在多期中不断降低厂商的市场力量。     

Trade policy in a “super size me” world

When a foreign monopolist sets a single market clearing price for its product, the sign of the optimal tariff is determined by the extent of pass through (also known as the terms of trade effect). However, when a foreign monopolist employs a second degree price discrimination mechanism in the domestic market the calculus of welfare maximization is very different. While there are still terms of trade effects from the imposition of a tariff, the existence of such effects are neither necessary nor sufficient to determine the sign of the optimal tariff. Instead the distribution of valuations within the population is the key determinant of the nature of policy intervention. This result differs significantly from the uniform price case and is driven by the incentive compatibility constraint which places the distribution of types at the center of the analysis. If there is a relatively large fraction of high valuation types in the population, then domestic information rents may be increased by subsidizing imports thereby increasing the consumption of the low valuation types and moving the incentive constraint in favor of the high valuation types. However, if the share of high types in the population is relatively small then the increase in information rents will also be small but the fiscal implications of a subsidy will be large. Consequently, the optimal policy will be to impose a trade tax.     

The distribution of gains from bilateral tariff reductions

A two-good, two-country model is used to analyse the distribution of gains from proportionate, bilateral tariff reductions It is shown that the distribution of gains is given by the solution to a rather complicated quadratic equation which exhibits multiple real roots. The country with the more elastic offer surface will be the relative gainer, for example, if it has either a very large or a very small tariff relative to the other country's tariff and relative to its own ‘optimal’ (Nash-equilibrium) tariff.     

The Role of GATT/WTO as a Commitment Device in the Presence of a Time Lag: Free Trade,Time‐consistent Tariff Policy and Market Size

We consider whether a free trade policy is superior to tariff policies in the presence of a time lag between production and trade decisions. We show that the preferable choice between a free trade policy and a time‐consistent tariff policy depends on the market size of the importing country. However, because a free trade policy itself is not necessarily credible in the presence of a time lag, the importing country requires an international organisation such as GATT/WTO as a commitment device. Accordingly, employing a non‐cooperative game approach, we analyse under what conditions becoming a member of such an international organisation is a subgame perfect Nash equilibrium and show that free trade under the GATT/WTO regime is Pareto improving for the importing and exporting countries.     

Preferences,rent destruction and multilateral liberalization: The building block effect of CUSFTA

If a free trade agreement (FTA) is characterized by the exchange of market access with a large and competitive trading partner, the agreement can cause a leakage of protectionist benefits to domestic industry from lobbying against external tariff cuts. This rent destruction effect of an FTA can free policy makers to be more aggressive in multilateral tariff cuts. We argue that the Canadian–US free trade agreement (CUSFTA) provides an ideal policy experiment to link this mechanism to the data. Exploring the determinants of Canada's tariff cuts at the 8-digit HS product level, we find that CUSFTA acted as an additional driver of Canadian multilateral tariff reductions during the Uruguay Round.     

乌拉圭回合前后美国园艺产品关税调整动向研究

美国是世界园艺的生产和贸易大国。乌拉圭回合谈判前后美国对园艺类产品的关税进行了大幅度的调整,对其本国园艺产品的贸易及对外推广起到了良好的促进作用。笔者对乌拉圭回合前后美国园艺产品关税调整的动向进行了研究,以期对我国园艺产品的关税调整提供一定的政策建议。     

基于CGE模型定量探析碳关税对我国经济的影响

碳关税是发达国家在应对金融危机中为保持本国经济对其他国家设置的绿色壁垒。文章基于可计算一般均衡(CGE)模型,在生产模块、对外贸易模块、收入支出模块、碳关税模块等模型相互嵌入式的构建,定量探析碳关税对我国对外贸易、总体经济、生态环境、不同省区经济的影响,进而得出碳关税政策对我国外贸、经济生产等方面造成较大负面影响,而在生态环境改善下影响甚微,其实质是一种保护本国经济、阻碍中国经济发展的贸易壁垒。     

Strategic Trade Policies Under Monopsony and Uncertainty: The Exporter’s Non-Linear Responses Based on the Organization of Its Industry

Players’ access to information, their market power, and the timing and rationale of their decisions are important but often neglected in the making of strategic trade policies. I examine optimal decisions in a monopsonistic market with asymmetric information to determine an exporting country’s policy strategies. The large importing country first sets a producer subsidy and later imposes an import tariff after learning about the welfare-maximizing exporter’s reactions to the subsidy. I assume that at the time of their decisions, the n exporting firms have incomplete information and rely only on noisy signals from their own domestic market to account for the uncertainty in the international market. I find that import tariff and producer subsidy can be substitute rather than exclusively independent policies. Results also show that the exporting country’s optimal reaction is non-linear and is based on the structure of its export industry; the exporting country’s government facing a large importer subsidizes (or taxes) its export when the number of exporting firms is low (or high) relative to a threshold number of firms. More important, before giving out subsidies, the exporting country’s government requires more collusion of its firms especially when the large importer targets a fixed domestic price.     

Non‐Tariff Measures,Specific Trade Concerns and Tariff Reduction

This paper studies the determinants of the recent proliferation of Specific Trade Concerns raised at the WTO on non‐tariff trade measures (NTMs), with a focus on sanitary and phytosanitary (SPS) and technical barriers to trade (TBTs). Even though NTMs are imposed de jure to protect consumers from unhealthy products, they increase trade costs de facto. So, when tariff protection lowers, NTMs become effective barriers to trade and the exporting countries can complain at the dedicated committee at the WTO (STCs). Therefore, we study whether STCs are raised by exporting countries as a consequence of tariff reductions in importing countries, that is when non‐tariff measures become barriers to trade. Using a recent database on STCs over the period 1996–2010, we find empirical evidence that SPS and TBT concerns are raised by exporting country as a consequence of importer's tariff cut.     

服务贸易政策的成本估计:基于STRI的关税等价

文章利用OECD的服务贸易限制指数(STRI)和亚洲开发银行多区域投入产出表,运用Anderson和Van Wincoop (2003)引力模型分析框架和泊松伪极大似然(PPML)估计技术,研究了服务贸易政策对服务总值贸易和增加值贸易的影响效应,并评估了政策壁垒的关税等价。研究发现,进口国服务贸易政策对服务总值进口以及内涵的国内增加值和国外增加值均有显著抑制作用,且对国外增加值的进口抑制作用更大。对于不同行业,服务贸易政策的经济成本存在显著差异,服务贸易政策促进了电信服务和航空运输服务的跨境贸易,但是对其他行业跨境贸易有显著抑制作用,2018年关税等价介于2.4%～249.8%之间。