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A comparison of internal and international barriers to trade

Author

Listed:
  • BRETON, Albert

    (Departement of Economics - University of Toronto)

  • SALMON, Pierre

    () (LATEC - Université de Bourgogne)

Abstract

In a world in which barriers to trade at all levels - international and internal - are mostly a by-product of the implementation by governments of different regulatory policies to deal with "domestic" or "local" problems, the mechanisms that are set in motion by the operation of competition among the governments inhabiting the different jurisdictional tiers of federal countries lead to outcomes that are different from those generated by the 'agreed-upon' rules that govern the relations of national governments with each other in matters of international trade. A model is used to compare two ways of dealing with the external damages that are consequent on the pursuit of beneficial domestic regulatory policies. It assumes that at the international level the methods used can be synthesized by what is known as the least-restrictive means principle, while in the context of competitive federalism the methods lead to what can be called a proper balancing of benefits and costs of domestic policies, including the spillover costs inflicted on others. With the help of this model, the paper shows that one or the other of the two sets of methods could be more restrictive, depending on the magnitude of spillovers and the relation between the instrument used and the achievement of the domestic objective. It includes also a discussion of the case of the European Union, which falls between these two polar extremes.

Suggested Citation

  • BRETON, Albert & SALMON, Pierre, 1999. "A comparison of internal and international barriers to trade," LATEC - Document de travail - Economie (1991-2003) 1999-12, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.
  • Handle: RePEc:lat:lateco:1999-12
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    References listed on IDEAS

    as
    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
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    5. Daniel Esty, 1994. "Greening the GATT: Trade, Environment, and the Future," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 40.
    6. Arye L. Hillman & Ngo Van Long & Peter Moser, 1995. "Modelling Reciprocal Trade Liberalization: The Political-economy and National-welfare Perspectives," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 131(III), pages 503-515, September.
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    More about this item

    Keywords

    barriers to trade; federalism; free trade; regulation; barrières aux échanges; fédéralisme; libre-échange; réglementation;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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