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Administrative Delays as Barriers to Trade

Author

Listed:
  • Regibeau Pierre M

    () (University of Essex and CEPR)

  • Rockett Katharine E

    () (University of Essex, University of Tromso and CEPR)

Abstract

We study a two-country model where two firms, one domestic and the other foreign, must decide when to introduce their new product into a market. The home government may apply an import tariff, an administrative delay, or both to the product of the foreign firm. An administrative delay imposes a waiting period between the time when the quality of the foreign product is determined and the time when the product can actually be sold. Our main interest is the differential effect of the tariff and the administrative delay on the timing of new product introductions and the resulting change in home, foreign and world welfare. We show that administrative delays are less efficient instruments for maximizing home welfare than tariffs. With a tariff, the home government can affect the timing of entry to ensure that the domestic firm moves first at the socially optimal date. Although an optimally chosen delay can achieve the same pattern of introduction, it does not yield any tariff revenues. As a result, if the tariff may be set optimally, administrative delays are not used in a discriminatory manner. If trade liberalization constrains the import tariff to be below its domestically optimal level, discriminatory administrative delays may become part of the optimal policy of the home country. As the optimal delay policy leads to lower levels of world welfare than the optimal tariff, trade liberalization can be welfare decreasing.

Suggested Citation

  • Regibeau Pierre M & Rockett Katharine E, 2006. "Administrative Delays as Barriers to Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-47, September.
  • Handle: RePEc:bpj:bejeap:v:contributions.5:y:2006:i:1:n:27
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    References listed on IDEAS

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    Cited by:

    1. Antoni Estevadeordal & Matthew Shearer & Kati Suominen, 2009. "Market Access Provisions in Regional Trade Agreement," IDB Publications (Working Papers) 2524, Inter-American Development Bank.
    2. Bagai, Shweta & Wilson, John S., 2006. "The data chase : what's out there on trade costs and nontariff barriers ?," Policy Research Working Paper Series 3899, The World Bank.
    3. Elizabeth Webster & Paul H. Jensen & Alfons Palangkaraya, 2014. "Patent examination outcomes and the national treatment principle," RAND Journal of Economics, RAND Corporation, vol. 45(2), pages 449-469, June.
    4. Chahir Zaki, 2010. "Towards an Explicit Modeling of Trade Facilitation in CGE Models: Evidence from Egypt," Working Papers 515, Economic Research Forum, revised 04 Jan 2010.
    5. Fabian Bergès & Sylvette Monier-Dilhan, 2013. "Trade Policy Reform : How to Win Wide-ranging Support ?," Recherches économiques de Louvain, De Boeck Université, vol. 79(2), pages 27-43.
    6. María del Carmen García-Alonso & Paul Levine, 2005. "Arms Export Controls, Subsidies And The Wto Exemption," Scottish Journal of Political Economy, Scottish Economic Society, vol. 52(2), pages 305-322, May.
    7. Antoni Estevadeordal & Matthew Shearer & Kati Suominen, 2009. "Market Access Provisions in Regional Trade Agreement," IDB Publications (Working Papers) 9311, Inter-American Development Bank.

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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