Welfare versus market access: The implications of tariff structure for tariff reform |
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Authors: | James E Anderson J Peter Neary |
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Institution: | a Department of Economics, Boston College, Chestnut Hill, MA 02167-3806, USA b NBER c UCD School of Economics, University College Dublin, Belfield, Dublin 4, Ireland d CEPR |
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Abstract: | We show that the effects of tariff changes on welfare and import volume are fully characterised by their effects on the generalised mean and variance of the tariff distribution, implying two “cones of liberalisation” in commodity price space. Because welfare is negatively but import volume positively related to the generalised variance, the cones do not intersect, which poses a policy dilemma. We present a new radial tariff reform rule, which implies new results for welfare- and market-access-improving tariff changes. Finally, we show that generalised and trade-weighted moments are mutually proportional when the trade expenditure function is CES. |
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Keywords: | Concertina rule Market access Piecemeal policy reform Tariff moments Uniform tariff reductions |
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