A Welfare Comparison between VERS and Tariffs under the GATT
AbstractEconomic theory suggests that tariffs are welfare-superior to voluntary export restraints in the presence of perfect competition. However, with perfectly competitive markets, some authors have found that voluntary export restraints may be welfare superior to tariffs. The authors reconsider the comparison between a voluntary export restraint and a tariff in the context of GATT-based constraints. Using a model of perfect competition, the authors show that a voluntary export restraint can welfare-dominate a tariff increase that is accompanied by a compensatory reduction in the tariff on another good or if the tariff is matched with a retaliatory tariff on domestic exports.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 26 (1993)
Issue (Month): 2 (May)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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- Michael O. Moore, 1996.
"Steel Protection in the 1980s: The Waning Influens of Big Steel?,"
in: The Political Economy of American Trade Policy, pages 73-132
National Bureau of Economic Research, Inc.
- Michael O. Moore, 1994. "Steel Protection in the 1980s: The Waning Influence of Big Steel?," NBER Working Papers 4760, National Bureau of Economic Research, Inc.
- Fuhmei Wang, 2011. "Who Bears the Burden of Voluntary Export Restraints?," Prague Economic Papers, University of Economics, Prague, vol. 2011(3), pages 216-231.
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