Shadow Pricing Market Access: A Trade Benefit Function Approach
Appropriate assessment of the social value of market access is at the core of a broad range of inquiries in trade research. A selection include: the appraisal of industry-level production and consumption distortions due to selective trade liberalization and partial tax reform; the construction of national-level quantity indicators of market access consistent with welfare change, and the use of international trade re-balancing as sanctions to discourage trade agreement violations, or as compensation in trade dispute settlement. In order to obtain shadow prices, we propose a new approach integrating the Luenberger benefit function and the directional output distance function. This yields a trade benefit function which represents trade preferences à la Meade in the context of a canonical general equilibrium model of trade. We first show that our approach is in keeping with well-established and commonly used measurement techniques of trade welfare, for the standard trade expenditure function is in fact dual to the trade benefit function. We then show that this dual relation allows for a direct retrieval of the shadow values of net imports from the trade benefit function. The usefulness and operationality of our approach is then demonstrated in a series of applications and simulations.
|Date of creation:||2008|
|Contact details of provider:|| Postal: Walter-Flex-Straße 3, D - 53113 Bonn|
Fax: +49 228 / 73-5097
Web page: http://www.zef.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Luenberger, David G., 1992. "Benefit functions and duality," Journal of Mathematical Economics, Elsevier, vol. 21(5), pages 461-481.
- Mayer, Wolfgang, 1981. "Theoretical Considerations on Negotiated Tariff Adjustments," Oxford Economic Papers, Oxford University Press, vol. 33(1), pages 135-153, March.
- R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," Review of Economic Studies, Oxford University Press, vol. 24(1), pages 11-32.
- Robert W. Staiger & Kyle Bagwell, 1999.
"An Economic Theory of GATT,"
American Economic Review,
American Economic Association, vol. 89(1), pages 215-248, March.
- Kyle Bagwell & Robert W. Staiger, 1997. "An Economic Theory of GATT," NBER Working Papers 6049, National Bureau of Economic Research, Inc.
- Bagwell,K. & Staiger,R.W., 1998. "An economic theory of GATT," Working papers 15, Wisconsin Madison - Social Systems.
- Nancy H. Chau & Rolf F”re & Shawna Grosskopf, 2003. "Trade restrictiveness and efficiency," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1079-1095, 08.
- Anderson, Kym, 2002. "Peculiarities of retaliation in WTO dispute settlement," World Trade Review, Cambridge University Press, vol. 1(02), pages 123-134, July.
- Anderson, Kym, 2002. "Peculiarities of Retaliation in WTO Dispute Settlement," CEPR Discussion Papers 3578, C.E.P.R. Discussion Papers.
- Kym Anderson, 2002. "Pecularities of Retaliation in WTO Dispute Settlement," Centre for International Economic Studies Working Papers 2002-07, University of Adelaide, Centre for International Economic Studies.
- J. Christophe Bureau & Nancy H. Chau & Rolf F”re & Shawna Grosskopf, 2003. "Economic Performance, Trade Restrictiveness, and Efficiency," Review of Development Economics, Wiley Blackwell, vol. 7(4), pages 527-542, November.
- Kawamata, Kunio, 1974. "Price Distortion and Potential Welfare," Econometrica, Econometric Society, vol. 42(3), pages 435-460, May.
- Balassa, Bela, 1985. "Exports, policy choices, and economic growth in developing countries after the 1973 oil shock," Journal of Development Economics, Elsevier, vol. 18(1), pages 23-35.
- Butler, Monika & Hauser, Heinz, 2000. "The WTO Dispute Settlement System: First Assessment from an Economic Perspective," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(2), pages 503-533, October.
- Monika BÜTLER & Heinz HAUSER, 2000. "The WTO Dispute Settlement System : A First Assessment from an Economic Perspective," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 00.02, Université de Lausanne, Faculté des HEC, DEEP.
- Butler, M. & Hauser, H., 2000. "The WTO Dispute Settlement System : A First Assessment from an Economic Perspective," Discussion Paper 2000-21, Tilburg University, Center for Economic Research.
- Chad P . Bown, 2002. "The Economics of Trade Disputes, the GATT's Article XXIII, and the WTO's Dispute Settlement Understanding," Economics and Politics, Wiley Blackwell, vol. 14(3), pages 283-323, November.
- Rolf Färe & Shawna Grosskopf, 2000. "Theory and Application of Directional Distance Functions," Journal of Productivity Analysis, Springer, vol. 13(2), pages 93-103, March.
- Chipman, John S. & Moore, James C., 1972. "Social utility and the gains from trade," Journal of International Economics, Elsevier, vol. 2(2), pages 157-172, May.
- Maria Cipollina & Luca Salvatici, 2008. "Measuring Protection: Mission Impossible?," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 577-616, 07.
- Salvatici, Luca & Cipollina, Maria, 2006. "Measuring Protection: Mission Impossible?," Working Papers 18876, TRADEAG - Agricultural Trade Agreements.
- John Kennan & Raymond Riezman, 2013. "Do Big Countries Win Tariff Wars?," World Scientific Book Chapters,in: International Trade Agreements and Political Economy, chapter 4, pages 45-51 World Scientific Publishing Co. Pte. Ltd..
- Kennan, John & Riezman, Raymond, 1988. "Do Big Countries Win Tariff Wars?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 81-85, February.
- Keen, Michael & Ligthart, Jenny E., 2002. "Coordinating tariff reduction and domestic tax reform," Journal of International Economics, Elsevier, vol. 56(2), pages 489-507, March.
- Michael Keen & Jenny E Ligthart, 1999. "Coordinating Tariff Reduction and Domestic Tax Reform," IMF Working Papers 99/93, International Monetary Fund.
- Edward E. Leamer, 1988. "Measures of Openness," NBER Chapters,in: Trade Policy Issues and Empirical Analysis, pages 145-204 National Bureau of Economic Research, Inc.
- Edward E. Leamer, 1987. "Measures of Openness," UCLA Economics Working Papers 447, UCLA Department of Economics.
- Chad P. Bown, 2005. "Participation in," World Bank Economic Review, World Bank Group, vol. 19(2), pages 287-310.
- Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
- Robert E. Baldwin, 1989. "Measuring Nontariff Trade Policies," NBER Working Papers 2978, National Bureau of Economic Research, Inc.
- Michael, Michael S. & Hatzipanayotou, Panos & Miller, Stephen M., 1993. "Integrated reforms of tariffs and consumption taxes," Journal of Public Economics, Elsevier, vol. 52(3), pages 417-428, October.
- A. D. Woodland, 1980. "Direct and Indirect Trade Utility Functions," Review of Economic Studies, Oxford University Press, vol. 47(5), pages 907-926.
- W. Erwin Diewert & Alan D. Woodland, 2004. "The Gains from Trade and Policy Reform Revisited," Review of International Economics, Wiley Blackwell, vol. 12(4), pages 591-608, 09.
- Deardorff, Alan V, 1980. "The General Validity of the Law of Comparative Advantage," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 941-957, October. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:ags:ubzefd:6218. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.