The nonequivalence of tariffs,import quotas,and voluntary export restraints

This paper compares the equilibrium levels of prices, imports, production and consumption under a tariff, an import quota, and a voluntary export restraint when each trade restriction is set so as to lead to the same quantity of imports. Competitive, domestic production monopoly, import monopoly, and export monopoly cases are examined. Voluntary export restraints are shown to have different effects than import quotas or tariffs, especially when some potential exporters remain outside the agreements.     

The (non)equivalence of optimal tariffs and quotas under uncertainty

Tariffs and quotas are compared as instruments for restricting imports to improve the terms of trade in a world in which domestic and/or foreign supply and demand conditions are stochastic. The two instruments are not generally equivalent in their welfare effects, and furthermore there is no general presumption in favour of one instrument over the other. In a particular model, characterized by linear supply and demand curves for imports, quotas are more likely to be superior when the predominant source of uncertainty is with respect to foreign supply conditions and when the supply of imports is inelastic.     

Pollution content tariffs, environmental rent shifting, and the control of cross-border pollution

This paper considers the optimal unilateral policy for a country that imports a good from a neighbouring country and is harmed by pollution generated during the production of that good. If the foreign country has a variable abatement technology, then Home has an incentive to impose a tax on the pollution content of imports (a pollution content tariff). Foreign regulation of pollution does not eliminate Home's incentives to intervene, but instead may create rent-shifting opportunities. By making the right to pollute a scarce asset, foreign pollution quotas create rents that the home government can try to extract.     

The heartland from afar

There is no shortage of willing hands to do the world's work. America's heartland, traditionally the center of industry, is having trouble competing with the flood of imports and cheap migrant labor. The solution to the malaise of the Midwest lies not in quotas, sanctions, or tariffs but in investing in infrastructures, quality, and people.     

Quotas versus tariffs

This paper examines the nonequivalence of tariffs and quotas under uncertainty, when the expected level of imports is constrained for noneconomic reasons. Tariffs and quotas are ranked according to their effect on expected social welfare. In the case of a stochastic foreign supply curve, the ranking will depend upon the height of the tariff. In the case of a stochastic import demand curve, a tariff will always yield greater social welfare than a quota.     

Price equivalent tariffs and quotas under a domestic monopoly

Price-equivalent import tariffs and quotas are compared when domestic production is controlled by a monopolist, say an agricultural marketing board with the power to restrict domestic supply, under endogenous terms of trade. Welfare comparisons boil down to sourcing costs comparisons. Quotas tend to dominate at high domestic prices, ad valorem tariffs at intermediate prices and specific tariffs at low domestic prices. Welfare maxima are achieved with more restrictive policies than under perfect competition. These results rationalize separate negotiations for sensitive products in the Doha Round and the setting of tariff-rate quotas that mimic import quotas for these products. Finally, in ascertaining the robustness of our policy ranking to the choice of variable anchoring the comparisons, we found that specific tariffs unambiguously dominate ad valorem tariffs and quotas when government revenue or imports anchor the comparisons. However, some quota revenues and import levels cannot be achieved with tariffs.     

EFFECT OF TEXTILE QUOTA RESTRICTIONS ON U.S. COTTON TEXTILE IMPORTS BETWEEN 1964 AND 1973

The objective of this study was to investigate the effect of U.S. cotton textile quotas on cotton textiles imported into the U.S. between 1964 and 1973. The findings showed that cotton imports requiring more processing stages had significantly greater 10-year average prices than other groups. Changes in the dollar value of imported cotton textiles during the decade have mainly occurred because of an increase in the average prices rather than resulting from a redistribution of imports from low to high average price groups. The weakening correlation between changes in the dollar value and in the quantity of high unit value groups indicated that the control on quantity has not precluded increases in total dollar value of imports in higher processing stages, especially since 1970. Since fabrics with a relatively stable average price accounted for the major importation of cotton textiles during the 1964–1973 period, the overall control by quantity in this decade was still quite good, even though average prices of apparel were rising.     

Parallel Imports,their Deterrence and Accommodation with Service Differentiation

In the traditional economics models, parallel imports prevent a manufacturer from price discrimination involving the same good between countries. As a result, the manufacturer loses profit and tries to discourage parallel imports. The consumers in low-price countries also lose when parallel imports are legalized because the price in such countries increases. When value-added services such as a warranty and technical support are available only for the authorized product (i.e., when services are differentiated), however, the manufacturer may obtain a larger profit with parallel imports, as shown in literature. We extend this study by analyzing the case in which the manufacturer can choose the level of value-added services. It turns out that the manufacturer may even encourage parallel imports when the cost for value-added services is not too low or too high. We also show that the consumers in low-price countries may gain when parallel imports are legalized.     

The equivalence of quotas and buffer stocks as alternative stabilization policies

The choice of an optimal policy when the foreign supply curve is unstable has been considered separately in two earlier articles. Both authors have shown that price stabization is welfare increasing if a tariff set for noneconomic reasons is above 100 percent. The fact that both achieve the same result despite the choice of different stabilization measures is taken up in this article. It is found that price stabilization through quotas or buffer stocks will have the same effect on economic welfare despite their differing impact on the level of imports under varying supply conditions.     

Reverse importing and asymmetric trade and FDI: a networks explanation

This paper considers the impact of business and social networks on international trade and FDI. I propose that differences in the strength of network effects across countries can produce asymmetric trade and investment flows that may lead to trade friction. A firm from a country with strong network effects has a cost advantage in selling to buyers from its own country. This advantage results in lower inward FDI, lower total imports but larger volumes of reverse imports into the country with strong network effects. The model’s predictions match observed asymmetric trade and investment flows that sometimes lead to US-Japan trade friction.     

Learning from toys: Reflections on the 2007 recall crisis

The year 2007 will be remembered as the year the toy industry was shaken by a seemingly endless stream of recalls. The scope of this recent wave of recalls associated with lead‐tainted toys coming from China has focused the attention of parents and others responsible for ers who sell these toys, companies who import these toys, and numerous government officials on the problem of toys that have been painted with lead‐tainted paint. Much of the focus of this crisis is on China and its contractors. This is counterproductive and reactive. The problem of lead‐tainted imports is not new. The fact that China is currently in the crosshairs is to a large degree a function of their growth in importance as a preferred site for outsourced manufacturing. It is a volume issue. Lead‐tainted imports have many causes, and these will be explored in this article. This article concludes with a discussion of lessons that managers can take from this crisis. © 2009 Wiley Periodicals, Inc.     

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.     

Regionalization of Textile Trade: Evidence from the EU,NAFTA, AFTA,and SAPTA

This study examines the integration effects of four regional trading agreements (RTAs) respectively the EU, NAFTA, AFTA, and SAPTA on textile fabric trade from 1990–2005. A modified gravity model for analyzing textile trade was first generated by the fixed-effects method. Regional dummy variables were then used to identify trade creation and trade diversion effects arising from the RTAs. The results indicated that neither trade creation nor trade diversion effects existed in the EU textile trade. Trade creation in terms of imports was identified in NAFTA and SAPTA. There is no indication of shifting textiles trade from the rest of the world to the member countries with the implementation of these two free trade areas (FTAs). On the contrary, trade diversion was recognised some years after AFTA's enactment. It represents a movement towards free trade and is beneficial for the welfare of the world. This article provides empirical evidence on how textiles trade influenced by the formation of RTAs and elimination of quotas on textiles products.     

Signalling and underutilization of import quota

This study introduces an information asymmetry regarding the foreign exporter's cost in a strategic trade model. We show that it is possible to use import quotas or voluntary export restraints as a signal of the strength of the foreign exporter who enters into a previously protected domestic market. Our model provides a possible explanation for the underutilization of import quotas that is consistent with rational behaviour on the part of importing and exporting countries. Under the assumption that the exporter's marginal cost of securing the import quota is sufficiently low the underutilization of an import quota is an equilibrium result.     

Product Complexity,Quality of Institutions and the Protrade Effect of Immigrants

The paper assesses the trade‐creating impact of foreign‐born residents on the international imports and exports of the French regions where they are settled. The protrade effect of immigrants is investigated along two intertwined dimensions: the complexity of traded goods and the quality of institutions in partner countries. The trade‐enhancing impact of immigrants is, on average, more salient when they come from a country with weak institutions. However, this positive impact is especially large on the imports of simple products. When we turn to complex goods, for which the information channel conveyed by immigrants is the most valuable, immigration enhances imports regardless of the quality of institutions in the partner country. Regarding exports, immigrants substitute for weak institutions on both simple and complex goods.     

Who Gains From Nominal Devaluation? An Empirical Assessment of Euro‐area Exports and Imports

In early 2013, rumours about the euro‐appreciation gained momentum, which may lead to decreases in exports and increases in imports of the member states. Therefore, we investigate the impact of changes in the nominal euro exchange rate vis‐à‐vis major currencies on export and import performance of nine different euro‐area countries. To disentangle the ‘true’ equilibrium elasticities Stein's unbiased risk estimate (SURE) system error correction models (SSECM) are estimated for nominal exchange rate changes versus the rest of the world or other major currencies. To differentiate between price level changes and changes of the nominal exchange rate, a country's export and import equation is estimated using separately the nominal rate and the relative price/unit labour cost as regressors. Results of Wald tests indicate that assuming both variables to have the same influence on exports and imports is misleading. Whether the relative price/unit labour costs elasticities are high or low depends crucially on which indicator is chosen, while the effect of nominal exchange rate changes can be estimated robustly for all countries in the sample. In particular, France and Spain are hit by a euro‐appreciation since their exports are highly exchange rate elastic. However, for France, this effect is at least partly offset by an also negative exchange rate elasticity of imports.     

Workers’ Participation in Training and Import Competition: Evidence from the USA

Merging industry‐level data on imports into the NLSY79 cohort data, we examine the relationship between rising imports and the amount of time workers in the US manufacturing sector spend in training events. A simple theoretical model shows the effect of foreign competition may depend on the type of training. Controlling for both industry and individual fixed effects, we find that rising imports lead workers to spend less time in training for the purpose of career advancement. There is some evidence this effect is stronger for less educated and lower ability workers.     

进口“近邻”与集群创新：成本追逐还是质量竞争？

中国经济长期“外循环”发展模式导致中间品严重依赖进口,对于制造业产业集群,微观企业创新动力无法转化为集群整体创新合力。以集群内部“行业内企业间” 研究视角切入,采用“近邻效应”模型深入探求邻居企业进口中间品行为对群内同行企业创新传导路径,结论发现：邻居进口对同群企业创新影响存在“成本追逐效应” 和“ 质量竞争效应”,中间品进口质量高低影响企业模仿创新和原始创新能力;“质量竞争效应” 的创新溢出可通过一般贸易渠道、人力资本渠道与市场规模渠道实现;有为政府持续创新激励和市场化导向制度改革有助于实现产业链与创新链“双链融合”及创新“量质齐飞”。     

RISK AND ILLEGAL TRADE

In many countries illegal imports have reached a considerable share of all national imports. Therefore, we have to investigate the economic effects resulting from smuggling. This paper explains this phenomenon by means of the managers' different individual attitudes towards risk and their different estimation of the exposure costs of illegal trade. It could be shown that this basis of smuggling is also an important aspect for a national economy, since the relative prices are affected by the risk and cost estimations of the trade firms.     

Firms' imports and quality upgrading: Evidence from Chinese firms

Using transaction-level data for the Chinese manufacturing sector, this paper provides a comprehensive analysis of the causal effect that firms' imports have on quality upgrading. We implement an empirical strategy that delivers quality estimates at the firm-product-destination level. Exploiting this measure and accounting for the endogeneity of imported inputs, this paper shows that sourcing from abroad boosts export quality. Moreover, the analysis indicates that quality improvements are particularly strong when firms purchase inputs from high-income countries. Taken together, these results provide direct evidence that quality upgrading is an important mechanism through which imports favour firms' export performance.