Industry Inefficiency,Monopoly and Import Liberalization in New Zealand — An Assessment of the Static Welfare Effects*

A monopoly industry trade model embodying various assumptions is used to estimate the static, partial, welfare effects of the New Zealand import liberalization policy introduced in 1984. Import licences for products competitive with domestic manufactures are being expanded, causing tendered premiums to fall until tariffs assume the protective role. The resulting price falls are estimated to produce an aggregate welfare gain of 0.28 per cent of GDP, and to generate large distributional effects.