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

Author

Listed:
  • Bergès, Fabian
  • Monier-Dilhan, Sylvette

Abstract

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.

Suggested Citation

  • Bergès, Fabian & Monier-Dilhan, Sylvette, 2010. "Trade Policy Reform: How to win wide-ranging support?," IDEI Working Papers 651, Institut d'Économie Industrielle (IDEI), Toulouse.
  • Handle: RePEc:ide:wpaper:23828
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    References listed on IDEAS

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    1. Regibeau Pierre M & Rockett Katharine E, 2006. "Administrative Delays as Barriers to Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-47, September.
    2. Stéphan Marette & John Beghin, 2017. "Are Standards Always Protectionist?," World Scientific Book Chapters,in: Nontariff Measures and International Trade, chapter 11, pages 179-192 World Scientific Publishing Co. Pte. Ltd..
    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. Barbara J. Spencer & Ronald W. Jones, 1991. "Vertical Foreclosure and International Trade Policy," Review of Economic Studies, Oxford University Press, vol. 58(1), pages 153-170.
    5. Irmen, Andreas, 1997. "Note on duopolistic vertical restraints," European Economic Review, Elsevier, vol. 41(8), pages 1559-1567, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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