Trade Policy Reform: How to win wide-ranging support?
AbstractThis article analyzes the effects of international trade policies on an imperfect competitive domestic market, taking into account not only consumers but also upstream and downstream firms. We first study the impact of a classic import tax decrease and we find that upstream firms are harmed and domestic fiscal revenues may decrease with such a policy. We then look at the effect of an increase in non-tariff barriers, seen as the lowest degree of substitutability between the domestic good and the imported good. The result is an improvement in each agent’s situation, since international competition becomes less fierce. Last, we show that market conditions may exist such that a coupled policy (import tax decrease and non-tariff barrier increase) makes every agent better off. This can explain why we observe a proliferation of domestic standards at national level in order to back up lower tariff negotiations by governments.
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Bibliographic InfoPaper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 651.
Date of creation: Dec 2010
Date of revision:
Publication status: Published in Louvain Economic Review - Recherches Economiques de Louvain, vol.�79, n°2, 2013.
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Other versions of this item:
- Bergès, Fabian & Monier-Dilhan, Sylvette, 2010. "Trade Policy Reform: How to win wide-ranging support?," TSE Working Papers 10-205, Toulouse School of Economics (TSE).
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-23 (All new papers)
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