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Welfare implications of a preferential tariff reduction for agricultural exports from less developed countries vs. a generalized tariff reduction

  • Anania, Giovanni

The paper presents the results of a theoretical study focusing on a comparative evaluation of the welfare effects of a preferential tariff reduction for agricultural exports from less developed countJ;ies versus a generalized tariff reduction. The results are derived using a diagrammatic approach. The analysis is developed within a partial equilibrium framework with one commodity, three large countries (importing developed country, exporting developed country, developing country), fixed exchange rates and zero transportation costs. The theoretical model makes provisions for a country to switch from being an exporter to being an importer, or vice versa, as the equilibrium price changes. Three alternative policy scenarios are analyzed: the imposition of a non-discriminatory tariff, a preferential tariff reduction, and a generalized tariff reduction. Two alternative definitions of the welfare functions are used. One is based on consumers' and producers' surplus, the other adds domestic income and changes in foreign exchange earnings/expenditure. Some methodological implications of the specific model used are discussed, along with the impact, in terms of welfare, of the policy scenarios considered.

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Article provided by Blackwell in its journal Agricultural Economics.

Volume (Year): 3 (1989)
Issue (Month): 1 (March)
Pages: 23-48

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Handle: RePEc:eee:agecon:v:3:y:1989:i:1:p:23-48
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  1. Anania, Giovanni, 1989. "Welfare Implications of a Preferential Tariff Reduction for Agricultural Exports from Less Developed Countries vs. a Generalized Tariff Reduction," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 3(1), March.
  2. McCulloch, Rachel & Pinera, Jose, 1977. "Trade as Aid: The Political Economy of Tariff Preferences for Developing Countries," American Economic Review, American Economic Association, vol. 67(5), pages 959-67, December.
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