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Rules of Origin as Commercial Policy Instruments

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  • Rod Falvey
  • Geoff Reed

Abstract

This paper examines the role of Rules of Origin as a commercial policy instrument which targets the input composition of imports. Using a three country, partial equilibrium structure, we demonstrate conditions under which the imposition of a binding Rule will be welfare improving for an importer facing either competitive export suppliers or an export monopolist. We also show that employing Rules of Origin in this way would be complementary to, rather than a substitute for, conventional optimal tariffs.

Suggested Citation

  • Rod Falvey & Geoff Reed, "undated". "Rules of Origin as Commercial Policy Instruments," EPRU Working Paper Series 97-20, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:epruwp:97-20
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    1. Rod Falvey & Geoff Reed, 1998. "Economic effects of rules of origin," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 134(2), pages 209-229, June.
    2. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
    3. Richardson, Martin, 1993. "Content Protection with Foreign Capital," Oxford Economic Papers, Oxford University Press, vol. 45(1), pages 103-117, January.
    4. Ronald W. Jones & Barbara J. Spencer, 1989. "Raw Materials, Processing Activities, and Protectionism," Canadian Journal of Economics, Canadian Economics Association, vol. 22(3), pages 469-486, August.
    5. Gene M. Grossman, 1981. "The Theory of Domestic Content Protection and Content Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 96(4), pages 583-603.
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