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Economic effects of 'leveling the playing field' in international trade


  • Alan Deardorff


This paper uses simple economic theory to examine the effects of various policies that are intended to level the playing field in international trade. That is, when foreign producers are given advantages over domestic producers by government subsidies or other interventions that lower their costs, domestic firms may argue that their own governments should either provide comparable assistance or should protect them from competing with the foreign firms on grounds of fairness. Economic analysis easily shows that granting these requests is usually harmful for the domestic economy as a whole, but that may not prevent such policies from being implemented. Therefore this paper examines what the further effects of such policies may be. The main conclusion that emerges is that policies to level the playing field most often overcompensate those who request them, making them better off than if the playing field had not been tilted against them in the first place.

Suggested Citation

  • Alan Deardorff, 2010. "Economic effects of 'leveling the playing field' in international trade," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 19(1), pages 9-32.
  • Handle: RePEc:taf:jitecd:v:19:y:2010:i:1:p:9-32 DOI: 10.1080/09638190903327419

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    References listed on IDEAS

    1. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318, March.
    2. SĂ©bastien Jean & David Laborde & Will Martin, 2008. "Choosing Sensitive Agricultural Products in Trade Negotiations," Working Papers 2008-18, CEPII research center.
    3. Gardner, Grant W & Kimbrough, Kent P, 1989. "The Behavior of U.S. Tariff Rates," American Economic Review, American Economic Association, vol. 79(1), pages 211-218, March.
    4. Francois, Joseph F. & Martin, Will, 2004. "Commercial policy variability, bindings, and market access," European Economic Review, Elsevier, vol. 48(3), pages 665-679, June.
    5. Jean-Jacques Hallaert, 2005. "Special Agricultural Safeguards; Virtual Benefits and Real Costs—Lessons for the Doha Round," IMF Working Papers 05/131, International Monetary Fund.
    6. Mattoo, Aaditya, 2005. "Services in a development round : three goals and three proposals," Policy Research Working Paper Series 3718, The World Bank.
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    More about this item


    subsidies; countervailing duties;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations


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