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Trade Policy Reform: How to win wide-ranging support?

  • Bergès, Fabian
  • Monier-Dilhan, Sylvette

This article analyzes the effects of international trade policies on an imperfect competitive domestic market, taking into account not only consumers but also upstream and downstream firms. We first study the impact of a classic import tax decrease and we find that upstream firms are harmed and domestic fiscal revenues may decrease with such a policy. We then look at the effect of an increase in non-tariff barriers, seen as the lowest degree of substitutability between the domestic good and the imported good. The result is an improvement in each agent’s situation, since international competition becomes less fierce. Last, we show that market conditions may exist such that a coupled policy (import tax decrease and non-tariff barrier increase) makes every agent better off. This can explain why we observe a proliferation of domestic standards at national level in order to back up lower tariff negotiations by governments.

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Paper provided by Institut d'Économie Industrielle (IDEI), Toulouse in its series IDEI Working Papers with number 651.

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Date of creation: Dec 2010
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Publication status: Published in Louvain Economic Review - Recherches Economiques de Louvain, vol.�79, n°2, 2013.
Handle: RePEc:ide:wpaper:23828
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  1. Régibeau, Pierre & Rockett, Katharine, 2001. "Administrative Delays as Barriers to Trade," CEPR Discussion Papers 3007, C.E.P.R. Discussion Papers.
  2. Marette, Stephan & Beghin, John C., 2010. "Are Standards Always Protectionist?," Staff General Research Papers 12826, Iowa State University, Department of Economics.
  3. Anders, Sven M. & Caswell, Julie A., 2009. "The Benefits and Costs of Proliferation of Geographical Labeling for Developing Countries," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 10(1).
  4. Andreas IRMEN, 1995. "Note on Duopolistic Vertical Restraints," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9507, Université de Lausanne, Faculté des HEC, DEEP.
  5. repec:inr:wpaper:39380 is not listed on IDEAS
  6. Spencer, Barbara J & Jones, Ronald W, 1991. "Vertical Foreclosure and International Trade Policy," Review of Economic Studies, Wiley Blackwell, vol. 58(1), pages 153-70, January.
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