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The Case Against Tariff Compensation

  • Peter G. Warr

Should lightly protected industries be given tariff compensation? Reasonable people can and do differ on this issue; neither the case supporting tariff compensation nor that opposing it is fully conclusive. Nevertheless, it is the purpose of this paper to argue that, on balance, the stronger argument is on the negative side. It is argued that economists in particular should focus their limited influence on recommending tariff reductions rather than tariff compensation, but that even if this fails they should be most reluctant to recommend tariff compensation. The potential benefits from tariff compensation are small relative to the gains from tariff reduction but the informational problems of tariff compensation are such as to make even these small potential benefits unlikely in practice.

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File URL: http://hdl.handle.net/10.1111/j.1467-8489.1978.tb00209.x
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Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 22 (1978)
Issue (Month): 2-3 (08-12)
Pages: 85-98

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Handle: RePEc:bla:ajarec:v:22:y:1978:i:2-3:p:85-98
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  1. Harris, Stuart, 1975. "Tariff Compensation: Sufficient Justification For Assistance To Australian Agriculture?," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 19(03), December.
  2. Lloyd, Peter J., 1975. "Tariff Compensation: An Undesirable Policy," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 19(03), December.
  3. Warr, Peter G, 1979. "Tariff Compensation without Omniscience," The Economic Record, The Economic Society of Australia, vol. 55(148), pages 20-32, March.
  4. Warr, Peter G, 1977. "Shadow Pricing with Policy Constraints," The Economic Record, The Economic Society of Australia, vol. 53(142&143), pages 149-66, June-Sept.
  5. Warr, Peter G, 1977. "Tariff Compensation via Input Subsidies," The Economic Record, The Economic Society of Australia, vol. 53(144), pages 508-16, December.
  6. Kym Anderson, 1978. "On Why Rates Of Assistance Differ Between Australia'S Rural Industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 22(2-3), pages 99-114, 08-12.
  7. Richard E. Caves, 1976. "Economic Models of Political Choice: Canada's Tariff Structure," Canadian Journal of Economics, Canadian Economics Association, vol. 9(2), pages 278-300, May.
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