Effective Protection Redux
AbstractThis paper rehabilitates effective protection. In general equilibrium, the usual definition (the percentage change in value added per unit induced by the tariff structure) corresponds to no economically interesting magnitude. The effective rate of protection for sector j is defined here as the uniform tariff which is equivalent to the actual differentiated tariff structure in its effect on the rents to residual claimants in sector j. This definition applies to general as well as partial equilibrium economic structures, has obvious relevance for political economy models and seems to correspond to the motivation for the early effective protection literature. Like the earlier effective rate formula, the concept is operational using the widely available set of Computable General Equilibrium (CGE) models. An example is provided for the US economy. The numerical results for the old and new concepts are not significantly correlated.
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Bibliographic InfoPaper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 308..
Length: 33 pages
Date of creation: Sep 1995
Date of revision:
Publication status: published, Journal of International Economics, 1998, 44:21-44.
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Web page: http://fmwww.bc.edu/EC/
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effective protection; distance function;
Other versions of this item:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
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