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Effective Protection Redux

Author

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  • James E. Anderson

    (Boston College)

Abstract

This paper rehabilitates effective protection. The usual definition of the effective rate of protection is the percentage change in value added per unit induced by the tariff structure. The problem is that in general equilibrium this measure corresponds to no economically interesting magnitude. The effective rate of protection for sector j is defined here as the uniform tariff which is equivalent to the actual differentiated tariff structure in its effects on the rents to residual claimants in sector j. This definition applies to general as well as partial equilibrium economic structures, has obvious relevance for political economy models and seems to correspond to the motivation for the early effective protection literature. Like the earlier effective rate formula, the concept is operational using the widely available set of Computable General Equilibrium (CGE) models.

Suggested Citation

  • James E. Anderson, 1994. "Effective Protection Redux," Boston College Working Papers in Economics 273., Boston College Department of Economics.
    • Handle: RePEc:boc:bocoec:273
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    Cited by:

    1. Ronald Fischer, "undated". "Trade liberalization in Latin America: The case of Chile," Documentos de Trabajo 190, Centro de Economía Aplicada, Universidad de Chile.
    2. Sorin BURNETE, 2017. "Outsourcing under Threat: Estimated Impact of Potential Tariffs on US Imports from Mexico," Expert Journal of Economics, Sprint Investify, vol. 5(3), pages 88-97.
    3. Evans, Lewis & Richardson, Martin, 2002. "Trade Reform in New Zealand: Unilateralism at Work," Working Paper Series 3934, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    4. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, University Library of Munich, Germany.

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    JEL classification:

    • F1 - International Economics - - Trade

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