Lumpsum versus Non-lumpsum Redistribution: A Second Glance
It has been argued by Turunen-Red and Woodland that, on only mild empirical assumptions, any system of non-distorting international transfers can be replaced by an "equivalent set" of distorting national tariffs without disturbing the international allocation of resources. This remarkable claim is disputed on the ground that the assumptions required for equivalence are not mild, that in particular they rule out quite plausible models of Arrow-Debreu type, and on the further ground that, in a context of non-uniqueness, a set of tariffs which supports an initial transferridden equilibrium might also support several quite different equilibria. An alternative proposition is proposed.
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- Kemp, Murray C. & Wan, Henry Jr., 1986. "Gains from trade with and without lump-sum compensation," Journal of International Economics, Elsevier, vol. 21(1-2), pages 99-110, August.
- Kemp, Murray & Wan, Henry, Jr., 2003. "Tariff Reform: Some Pre-strategic Considerations," Working Papers 03-01, Cornell University, Center for Analytic Economics.
- Hammond, Peter J & Sempere, Jaime, 1995. "Limits to the Potential Gains from Economic Integration and Other Supply Side Policies," Economic Journal, Royal Economic Society, vol. 105(432), pages 1180-1204, September.
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