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Uncertainty and the Choice of Protective Instrument

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Author Info
Falvey, Rodney E
Lloyd, P J
Abstract

This paper examines the problem of how governments choose among trade-policy instruments under uncertainty. Policymakers are assumed to select the level and form of protection so as to maximize a political support function whose arguments are the utilities of individual producers, consumers, and rent recipients. The characteristics of the optimal protective instrument are then derived for different sources of uncertainty. The model is also used to make second-best rankings between tariff and quota instruments that depend upon the source of uncertainty and other parameters. Copyright 1991 by Royal Economic Society.

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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 43 (1991)
Issue (Month): 3 (July)
Pages: 463-78
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Handle: RePEc:oup:oxecpp:v:43:y:1991:i:3:p:463-78

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  1. Francois, Joseph & Martin, Will, 2002. "Commercial Policy Variability, Bindings and Market Access," CEPR Discussion Papers 3294, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Anderson, Simon P. & Schmitt, Nicolas, 2000. "Non-Tariff Barriers and Trade Liberalization," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  3. Joseph F. Francois & Will Martin, 1998. "Commercial Policy Uncertainty, the Expected Cost of Protection, and Market Access," Tinbergen Institute Discussion Papers 98-059/2, Tinbergen Institute. [Downloadable!]
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