Technical Barriers, Import Licenses And Tariffs As Means Of Limiting Market Access
Technical barriers (standards), import licenses and tariffs may be deployed as means of limiting the market access of foreign firms. The present paper examines these measures in a setting of monopolistic competition. We find that, if protection focuses predominantly on the number of foreign firms accessing the domestic market, a technical barrier (an import license) may dominate a tariff (tariff and a technical barrier) in terms of consumer welfare, even when tariff revenues are fully redistributed. However, if protection pays sucfficient focus on limiting the total import volume, then tariffs are the preferred means of protection. Within the model, reductions in technical barriers and tariffs, the removal of licensing schemes, and a harmonization of standards are all welfare-improving policies.
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