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Welfare versus Market Access: The Implications of Tariff Structure for Tariff Reform

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  • James E. Anderson

    () (Boston College)

  • J. Peter Neary

    (University College Dublin)

Abstract

We show that the effects of tariff changes on welfare and import volume can be fully characterised by their effects on the generalised mean and variance of the tariff distribution. Using these tools, we derive new results for welfare- and market-access-improving tariff changes, which imply two "cones of liberalisation" in price space. Because welfare is negatively but import volume positively related to the generalised variance, the cones do not intersect, which poses a dilemma for trade policy reform. Finally, we show that generalised and trade-weighted moments are mutually proportional when the trade expenditure function is CES.

Suggested Citation

  • James E. Anderson & J. Peter Neary, 2004. "Welfare versus Market Access: The Implications of Tariff Structure for Tariff Reform," Boston College Working Papers in Economics 601, Boston College Department of Economics.
  • Handle: RePEc:boc:bocoec:601
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    References listed on IDEAS

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    1. James E. Anderson & J. Peter Neary, 1996. "A New Approach to Evaluating Trade Policy," Review of Economic Studies, Oxford University Press, vol. 63(1), pages 107-125.
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    10. Hiau Looi Kee & Alessandro Nicita & Marcelo Olarreaga, 2008. "Import Demand Elasticities and Trade Distortions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 666-682, November.
    11. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
    12. James E. Anderson & J. Peter Neary, 2003. "The Mercantilist Index of Trade Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 627-649, May.
    13. Michael Bruno, 1972. "Market Distortions and Gradual Reform," Review of Economic Studies, Oxford University Press, vol. 39(3), pages 373-383.
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    17. Fukushima, Takashi, 1979. "Tariff Structure, Nontraded Goods and Theory of Piecemeal Policy Recommendations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 427-435, June.
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    Cited by:

    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    2. James E. Anderson & J. Peter Neary, 2013. "Revenue Tariff Reform," NBER Working Papers 19752, National Bureau of Economic Research, Inc.
    3. Javorcik, Beata S. & Narciso, Gaia, 2008. "Differentiated products and evasion of import tariffs," Journal of International Economics, Elsevier, vol. 76(2), pages 208-222, December.
    4. Jenny Ligthart & Gerard C. van der Meijden, 2010. "Coordinated Tax-Tariff Reforms, Informality, and Welfare Distribution," CESifo Working Paper Series 3107, CESifo Group Munich.
    5. repec:fpr:ifpric:9780896292499-04 is not listed on IDEAS
    6. David Laborde & Will Martin & Dominique van der Mensbrugghe, 2017. "Measuring the Impacts of Global Trade Reform with Optimal Aggregators of Distortions," Review of International Economics, Wiley Blackwell, vol. 25(2), pages 403-425, May.
    7. Sébastien Jean & David Laborde & Will Martin, 2008. "Choosing Sensitive Agricultural Products in Trade Negotiations," Working Papers 2008-18, CEPII research center.
    8. Rod Falvey & Udo Kreickemeier, 2017. "Tariff Reforms with Rigid Wages," World Scientific Book Chapters,in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 4, pages 95-116 World Scientific Publishing Co. Pte. Ltd..
    9. Will Martin & Kym Anderson, 2008. "Agricultural trade reform under the Doha Agenda: some key issues ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 1-16, March.
    10. Michael Michael & Panos Hatzipanayotou, 2013. "Pollution and reforms of domestic and trade taxes towards uniformity," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(5), pages 753-768, October.
    11. Pascalis Raimondos-Møller & Alan Woodland, 2014. "Steepest ascent tariff reform," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(1), pages 69-99, January.
    12. Laborde Debucquet, David & Martin, Will, 2017. "Formulas for failure? Were the Doha tariff formulas too ambitious for success?:," IFPRI book chapters,in: Agriculture, development, and the global trading system: 2000– 2015, chapter 4 International Food Policy Research Institute (IFPRI).
    13. Hiau Looi Kee & Alessandro Nicita & Marcelo Olarreaga, 2008. "Import Demand Elasticities and Trade Distortions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 666-682, November.
    14. Fontagne, Lionel & Laborde, David & Mitaritonna, Cristina, 2008. "An Impact Study of the Economic Partnership Agreements (EPAs) in the Six ACP Regions," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44194, European Association of Agricultural Economists.
    15. Kreickemeier, Udo & Raimondos-Møller, Pascalis, 2006. "Concertina Reforms with International Capital Mobility," CEPR Discussion Papers 5888, C.E.P.R. Discussion Papers.
    16. Antoine Bouët & Simon Mevel & David Orden, 2007. "More or Less Ambition in the Doha Round: Winners and Losers from Trade Liberalisation with a Development Perspective," The World Economy, Wiley Blackwell, vol. 30(8), pages 1253-1280, August.
    17. repec:eee:inecon:v:111:y:2018:i:c:p:134-142 is not listed on IDEAS
    18. Anderson, James E. & Neary, J. Peter, 2016. "Sufficient statistics for tariff reform when revenue matters," Journal of International Economics, Elsevier, vol. 98(C), pages 150-159.
    19. Raimondos-Møller, Pascalis & Woodland, Alan D., 2015. "Market access and welfare: Is there a conflict?," Economics Letters, Elsevier, vol. 126(C), pages 163-166.
    20. Cletus C. Coughlin, 2010. "Measuring international trade policy: a primer on trade restrictiveness indices," Review, Federal Reserve Bank of St. Louis, issue Sep, pages 381-394.
    21. Michał BURZYŃSKI, 2014. "Trading Goods or Human Capital The Winners and Losers of Economic Integration," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2014022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    22. Kreickemeier, Udo & Raimondos-Møller, Pascalis, 2008. "Tari[ff]-tax reforms and market access," Journal of Development Economics, Elsevier, vol. 87(1), pages 85-91, August.
    23. Lionel Fontagné & David Laborde & Cristina Mitaritonna, 2009. "An Impact Study of the Economic Partnership Agreements (EPAs) in the Six ACP Regions," Working Papers halshs-00967434, HAL.
    24. Sajal Lahiri & Peri Silva, 2016. "Potential Pareto-Improving Move Toward Most Favored Nation Tariffs," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 1086-1104, April.
    25. Joachim Stibora & Albert De Vaal, 2012. "Multilateral trade liberalization and public goods provision in a North-South trade model with nonhomothetic preferences," Economics and Business Letters, Oviedo University Press, vol. 1(2), pages 27-36.

    More about this item

    Keywords

    Concertina rule; Market access; Piecemeal policy reform; Tariff moments; Uniform tariff reductions.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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