Are Economists' Traditional Trade Policy Views Still Valid?
Recent analysis of trade policies under imperfectly competitive market conditions as well as in situations where trade in high-technology products is important have raised doubts whether economists should continue their traditional opposition to trade taxes and subsidies. This paper evaluates the new theoretical arguments for interventionist trade policies by comparing them with the traditional arguments for and against free trade, investigating the empirical evidence supporting the conditions assumed in the new models, appraising the realism of the behavior assumptions of these models and the sensitivity of their conclusions to changes in these assumptions, and considering the political economy implications of these conclusions. The general conclusion is that there are serious practical difficulties with the interventionist arguments of the 'new' trade theorists, as they themselves recognize, just as there are with such traditional arguments for trade intervention as the terms-of-trade case for protection. However, the new industrial organization approach to trade theory has already provided valuable insights into trade behavior in international markets and promises to provide many more as more realistic behavior models are developed.
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Volume (Year): 30 (1992)
Issue (Month): 2 (June)
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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- J. David Richardson, 1989. "Empirical Research on Trade Liberalization With Imperfect Competition: A Survey," NBER Working Papers 2883, National Bureau of Economic Research, Inc.
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- James A. Brander & Barbara J. Spencer, 1984. "Export Subsidies and International Market Share Rivalry," NBER Working Papers 1464, National Bureau of Economic Research, Inc.
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