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Designing Policy To Open Trade

Author

Listed:
  • Robert C. Feenstra
  • Tracy Lewis
  • John McMillan

Abstract

In this paper we consider recent proposals to auction U.S. import quotas, using the funds so obtained to encourage relocation out of the protected industries. We first discuss the design of quota auctions so as to maximize revenue for the government. We then consider why quota auctions should be used at all, rather than simply using tariffs, or immediately opening trade and compensating people with income transfers. We argue that the information available to the government, or lack thereof, is a critical factor in understanding these policies.

Suggested Citation

  • Robert C. Feenstra & Tracy Lewis & John McMillan, 1990. "Designing Policy To Open Trade," Economics and Politics, Wiley Blackwell, vol. 2(3), pages 223-240, November.
    • Handle: RePEc:bla:ecopol:v:2:y:1990:i:3:p:223-240
    DOI: 10.1111/j.1468-0343.1990.tb00031.x
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    References listed on IDEAS

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    1. Brander, James A. & Spencer, Barbara J., 1994. "Trade adjustment assistance : Welfare and incentive effects of payments to displaced workers," Journal of International Economics, Elsevier, vol. 36(3-4), pages 239-261, May.
    2. Feenstra, Robert C. & Lewis, Tracy R., 1994. "Trade adjustment assistance and Pareto gains from trade," Journal of International Economics, Elsevier, vol. 36(3-4), pages 201-222, May.
    3. Raquel Fernandez, 1988. "Tariffs in an Economy with Incomplete Markets and Unemployment," NBER Working Papers 2705, National Bureau of Economic Research, Inc.
    4. James E. Anderson, 1988. "The Relative Inefficiency of Quotas," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511789, December.
    5. Krishna, Kala, 1993. "Auctions with Endogenous Valuations: The Persistence of Monopoly Revisited," American Economic Review, American Economic Association, vol. 83(1), pages 147-160, March.
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    7. repec:fth:harver:1513 is not listed on IDEAS
    8. Riordan, Michael H & Staiger, Robert W, 1993. "Sectoral Shocks and Structural Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 611-629, August.
    9. Kala Krishna, 1999. "Auctions with endogenous valuations: the snowball effect revisited," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(2), pages 377-391.
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