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Political-Economy Arguments for a Uniform Tariff

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  • Panagariya, Arvind
  • Rodrik, Dani

Abstract

We consider three political-economy arguments in favor of a uniform tariff rule (UTR). First, if tariffs are determined by lobbying, adoption of a UTR creates a free-rider problem. A tariff resulting from lobbying by one sector becomes available to all other sectors. This reduces incentive for lobbying. Second, if there are imported inputs which are used by import-competing sectors, a UTR leads to a lower level of lobbying. Finally, a UTR may tie the hands of a future government expected to favor certain sectors over others, and enhance welfare ex ante. None of these presents an air-tight case for uniformity. Copyright 1993 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 34 (1993)
Issue (Month): 3 (August)
Pages: 685-703

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Handle: RePEc:ier:iecrev:v:34:y:1993:i:3:p:685-703

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  1. Panagariya, Arvind, 1990. "How should tariffs be structured?," Policy Research Working Paper Series 353, The World Bank.
  2. Rodrik, Dani, 1986. "Tariffs, subsidies, and welfare with endogenous policy," Journal of International Economics, Elsevier, vol. 21(3-4), pages 285-299, November.
  3. Bhagwati, Jagdish N, 1982. "Directly Unproductive, Profit-seeking (DUP) Activities," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 988-1002, October.
  4. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
  5. Panagariya, Arvind, 1992. "Input tariffs, duty drawbacks, and tariff reforms," Journal of International Economics, Elsevier, vol. 32(1-2), pages 131-147, February.
  6. W. M. Corden, 1958. "Import Restrictions And Triffs:A New Look At Australian Policy," The Economic Record, The Economic Society of Australia, vol. 34(69), pages 331-346, December.
  7. Balassa, Bela, 1989. "Tariff policy and taxation in developing countries," Policy Research Working Paper Series 281, The World Bank.
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