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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. Stéphan Marette & John C. Beghin, 2007. "Are Standards Always Protectionist?," Center for Agricultural and Rural Development (CARD) Publications 07-wp450, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Irmen, Andreas, 1997. "Note on duopolistic vertical restraints," European Economic Review, Elsevier, vol. 41(8), pages 1559-1567, August.
  3. Jones, R.W. & Spencer, B.J., 1989. "Vertical Foreclosure And International Trade Policy," RCER Working Papers 194, University of Rochester - Center for Economic Research (RCER).
  4. Régibeau, Pierre & Rockett, Katharine, 2001. "Administrative Delays as Barriers to Trade," CEPR Discussion Papers 3007, C.E.P.R. Discussion Papers.
  5. Sven Anders & Julie A. Caswell, 2008. "The Benefits and Costs of Proliferation of Geographical Labelling for Developing Countries," Working Papers 2008-7, University of Massachusetts Amherst, Department of Resource Economics.
  6. Stephan Marette & John Beghin, 2010. "Are standards always protectionist?," Working Papers 39380, Institut National de la Recherche Agronomique, France.
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