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How Barriers to International Trade Affect TFP

Author

Listed:
  • Arilton Teixeira

    () (FUCAPE Business School)

  • Berthold Herrendorf

    ()

Abstract

We ask how barriers to international trade affect TFP when there are monopoly rights in the import-competing industries. Holmes and Schmitz (1995) show that without barriers to trade TFP in these industries is as large as possible. We study the general case of finite barriers to trade. We find that binding quotas lead to the use of inefficient technology in the import-competing industries. In addition, infinite quotas or tariffs imply that the import-competing industries produce larger than efficient quantities, if they produce at all. For both of these reasons, barriers to international trade reduce TFP.

Suggested Citation

  • Arilton Teixeira & Berthold Herrendorf, 2009. "How Barriers to International Trade Affect TFP," Fucape Working Papers 21, Fucape Business School.
  • Handle: RePEc:bbz:fcpwps:21
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Barseghyan, Levon & DiCecio, Riccardo, 2011. "Entry costs, industry structure, and cross-country income and TFP differences," Journal of Economic Theory, Elsevier, vol. 146(5), pages 1828-1851, September.
    2. Desmet, Klaus & Parente, Stephen, 2006. "Bigger is Better: Market Size, Demand Elasticity and Resistance to Technology Adoption," CEPR Discussion Papers 5825, C.E.P.R. Discussion Papers.
    3. Moro, Alessio, 2012. "Biased Technical Change, Intermediate Goods, And Total Factor Productivity," Macroeconomic Dynamics, Cambridge University Press, vol. 16(02), pages 184-203, April.
    4. Lei Fang, 2017. "Entry Barriers, Competition, And Technology Adoption," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 794-805, April.
    5. Frank A.G. den Butter, 2012. "Managing Transaction Costs in the Era of Globalization," Books, Edward Elgar Publishing, number 14748, April.
    6. Riccardo DiCecio & Levon Barseghayn, 2009. "Entry Costs, Misallocation, and Cross-Country Income and TFP Differences," 2009 Meeting Papers 428, Society for Economic Dynamics.
    7. Frank Butter & Jan Möhlmann & Paul Wit, 2008. "Trade and product innovations as sources for productivity increases: an empirical analysis," Journal of Productivity Analysis, Springer, vol. 30(3), pages 201-211, December.
    8. repec:sbe:breart:v:30:y:2010:i:1:a:2823 is not listed on IDEAS
    9. Tasso Adamopoulos, 2008. "Land Inequality and the Transition to Modern Growth," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 257-282, April.
    10. Igor D. Livshits & James C. MacGee, 2008. "Barriers to Technology Adoption and Entry," University of Western Ontario, Economic Policy Research Institute Working Papers 20087, University of Western Ontario, Economic Policy Research Institute.
    11. Arilton Teixeira & Mirta N. S. Bugarin & Roberto Ellery Jr. & Victor Gomes, 2009. "From a Miracle to a Disaster: the Brazilian Economy in the 3 last Decades," Fucape Working Papers 20, Fucape Business School.
    12. Leal-Ordoñez Julio C., 2015. "Key sectors in economic development: a perspective from input-output linkages and cross-sector misallocation," Working Papers 2015-23, Banco de México.
    13. Butter, Frank A.G. den & Wit, Paul, 2006. "Trade and product innovations as sources for productivity increases: an empirical analysis," Serie Research Memoranda 0013, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    14. Bridgman, Benjamin R. & Livshits, Igor D. & MacGee, James C., 2007. "Vested interests and technology adoption," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 649-666, April.
    15. Pedro Cavalcanti Ferreira & Joao victor Issler & Samuel de Abreu Pessoa, 2005. "An investigation of cross-country incme differences," Revista de Analisis Economico – Economic Analysis Review, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines, vol. 20(2), pages 3-22, December.

    More about this item

    Keywords

    TFP; Monopoly Rights; Quota; Tariff.;

    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General

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