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Trade restrictiveness and efficiency

  • Nancy H. Chau
  • Rolf F”re
  • Shawna Grosskopf

This article proposes a trade restrictiveness quantity index (TRQI) to measure the welfare impact of trade restrictions based on a distance functions approach. The TRQI embodies two Farrell measures of efficiency-respectively for producers and consumers-that can be computed using standard efficiency measurement techniques. The TRQI can also be decomposed into a trade distortion and domestic distortion component. In the context of the debate on the interlinkages between openness and economic performance, the TRQI offers a means to disentangle economic inefficiencies induced by trade restrictions alone, from otherwise not directly trade-related economic inefficiencies induced by domestic distortions. Copyright 2003 By The Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

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Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 44 (2003)
Issue (Month): 3 (08)
Pages: 1079-1095

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Handle: RePEc:ier:iecrev:v:44:y:2003:i:3:p:1079-1095
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