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Rent Sharing in the Multi-fibre Arrangement: Theory and Evidence from U.S. Apparel Imports from Hong Kong

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Author Info
Krishna, Kala
Erzan, Refik
Tan, Ling Hui

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Abstract

Available estimates of tariff equivalents and welfare costs of MFA quotas are based on the premise of perfect competition in both product and license markets, and the assumption that exporting countries receive all the scarcity rent. We test if U.S. apparel imports from Hong-Kong conform with this competitive model by looking at whether the license-price-inclusive Hong Kong price, adjusted for tariffs and transport costs, is equal to the U.S. price. We deal with the homogeneous product case and correct for both aggregation and quality differences. We find that U.S. importers seem to retain a substantial portion of the quota rents. Copyright 1994 by Blackwell Publishing Ltd.

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Publisher Info
Article provided by Blackwell Publishing in its journal Review of International Economics.

Volume (Year): 2 (1994)
Issue (Month): 1 (February)
Pages: 62-73
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Handle: RePEc:bla:reviec:v:2:y:1994:i:1:p:62-73

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0965-7576

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Richard E. Baldwin & Paul Krugman, 1986. "Market Access and International Competition: A Simulation Study of 16K Random Access Memories," NBER Working Papers 1936, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Kala Krishna, 1988. "Tariffs vs. Quotas with Endogenous Quality," NBER Working Papers 1535, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Carlos Alfredo Rodriguez, 1979. "The Quality of Imports and the Differential Welfare Effects of Tariffs, Quotas, and Quality Controls as Protective Devices," Canadian Journal of Economics, Canadian Economics Association, vol. 12(3), pages 439-49, August. [Downloadable!] (restricted)
  4. Irene Trela & John Whalley, 1988. "Do Developing Countries Lose From the MFA?," NBER Working Papers 2618, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Hamilton, Carl, 1986. "An Assessment of Voluntary Restraints on Hong Kong Exports to Europe and the USA," Economica, London School of Economics and Political Science, vol. 53(211), pages 339-50, August. [Downloadable!] (restricted)
  6. Kala Krishna, 1988. "The Case of the Vanishing Revenues: Auction Quotas With Oligopoly," NBER Working Papers 2723, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Meenu Tewari, 2005. "The Role of Price and Cost Competitiveness in Apparel Exports, Post-MFA: A Review," Indian Council for Research on International Economic Relations, New Delhi Working Papers 173, Indian Council for Research on International Economic Relations, New Delhi, India. [Downloadable!]
  2. Meenu Tiwari, 2006. "The Role of Price and cost Competitiveness in Apparel Exports, post MFA: A Review," Working Papers id:485, esocialsciences.com. [Downloadable!]
  3. Anderson, James E., 1997. "Revenue Neutral Trade Reform with Many Households, Quotas and Tariffs," Seminar Papers 626, Stockholm University, Institute for International Economic Studies. [Downloadable!]
    Other versions:
  4. James E. Anderson, 1999. "Trade Reform Diagnostics with Many Households, Quotas, and Tariffs," Boston College Working Papers in Economics 417, Boston College Department of Economics, revised 03 May 2000. [Downloadable!]
    Other versions:
  5. Erzan, Refik & Holmes, Christopher, 1992. "The restrictiveness of the multi-fibre arrangement on Eastern European trade," Policy Research Working Paper Series 860, The World Bank. [Downloadable!]
  6. Bannister, Geoffrey J., 1993. "Rent-sharing in the multi-fibre arrangement : the case of Mexico," Policy Research Working Paper Series 1191, The World Bank. [Downloadable!]
  7. Hertel, Thomas W. & Bach, Christian F. & Dimaranan, Betina & Martin, Will, 1996. "Growth, globalization, and gains from the Uruguay Round," Policy Research Working Paper Series 1614, The World Bank. [Downloadable!]
  8. Geoffrey Bannister, 1994. "Rent sharing in the multi-fibre arrangement: The case of Mexico," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 130(4), pages 800-827, December. [Downloadable!] (restricted)
  9. Yongzheng Yang & Montfort Mlachila, 2004. "The End of Textiles Quotas: A Case Study of the Impact on Bangladesh," IMF Working Papers 04/108, International Monetary Fund. [Downloadable!]
  10. Jarvis, Lovell S., 2003. "How Brazil Transferred Billions To Foreign Coffee Importers: The International Coffee Agreement, Rent Seeking And Export Tax Rebates," Working Papers 11967, University of California, Davis, Department of Agricultural and Resource Economics. [Downloadable!]
  11. Faini, Riccardo & de Melo, Jaime & Takacs, Wendy, 1993. "A primer on the MFA maze," Policy Research Working Paper Series 1088, The World Bank. [Downloadable!]
    Other versions:
  12. Kenneth A. Hanson & Kenneth A. Reinert, 1997. "The Distributional Effects Of U.S. Textile And Apparel Protection," International Economic Journal, Korean International Economic Association, vol. 11(3), pages 1-12, October. [Downloadable!] (restricted)
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