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How Barriers to International Trade Affect TFP

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  • Berthold Herrendorf

    (Arizona State University)

  • Arilton Teixeira

    (Fundacao Capixaba de Pesquisa)

Abstract

We ask how barriers to international trade affect TFP when there are monopoly rights in the import--competing industries. Holmes and Schmitz (1995) show that without barriers to trade TFP in these industries is as large as possible. We study the general case of finite barriers to trade. We find that binding quotas lead to the use of inefficient technology in the import--competing industries. In addition, finite quotas or tariffs imply that the import--competing industries produce larger than efficient quantities, if they produce at all. For both of these reasons, barriers to international trade reduce TFP. (Copyright: Elsevier)

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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 8 (2005)
Issue (Month): 4 (October)
Pages: 866-876

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Handle: RePEc:red:issued:v:8:y:2005:i:4:p:866-876

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Keywords: TFP; Monopoly Rights; Quota; Tariff;

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References

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Citations

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Cited by:
  1. Tasso Adamopoulos, 2008. "Land Inequality and the Transition to Modern Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 257-282, April.
  2. Butter, Frank A.G. den & Wit, Paul, 2006. "Trade and product innovations as sources for productivity increases: an empirical analysis," Serie Research Memoranda 0013, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  3. Igor D. Livshits & James C. MacGee, 2008. "Barriers to Technology Adoption and Entry," University of Western Ontario, Economic Policy Research Institute Working Papers 20087, University of Western Ontario, Economic Policy Research Institute.
  4. Riccardo DiCecio & Levon Barseghyan, 2010. "Entry Costs, Industry Structure, and Cross-Country Income and TFP Differences," 2010 Meeting Papers 964, Society for Economic Dynamics.
  5. Alessio Moro, 2007. "Biased Technical Change, Intermediate Goods and Total Factor Productivity," Economics Working Papers we076034, Universidad Carlos III, Departamento de Economía, revised Jun 2008.
  6. Pedro Cavalcanti Ferreira & Joao victor Issler & Samuel de Abreu Pessoa, 2005. "An investigation of cross-country incme differences," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 20(2), pages 3-22, December.
  7. Bridgman, Benjamin R. & Livshits, Igor D. & MacGee, James C., 2007. "Vested interests and technology adoption," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 649-666, April.
  8. Arilton Teixeira & Mirta N. S. Bugarin & Roberto Ellery Jr. & Victor Gomes, 2009. "From a Miracle to a Disaster: the Brazilian Economy in the 3 last Decades," Fucape Working Papers 20, Fucape Business School.
  9. Desmet, Klaus & Parente, Stephen, 2006. "Bigger is Better: Market Size, Demand Elasticity and Resistance to Technology Adoption," CEPR Discussion Papers 5825, C.E.P.R. Discussion Papers.
  10. Lei Fang, 2009. "Entry barriers, competition, and technology adoption," Working Paper 2009-08, Federal Reserve Bank of Atlanta.
  11. Levon Barseghyan & Riccardo DiCecio, 2009. "Entry costs, misallocation, and cross-country income and TFP differences," Working Papers 2009-005, Federal Reserve Bank of St. Louis.
  12. Frank Butter & Jan Möhlmann & Paul Wit, 2008. "Trade and product innovations as sources for productivity increases: an empirical analysis," Journal of Productivity Analysis, Springer, vol. 30(3), pages 201-211, December.

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