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Bargains Rejected? Developing Country Trade Policy on Used Equipment

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  • G. BARBA NAVARETTI
  • I. SOLOAGA
  • W. TAKACS

Abstract

Many developing countries restrict imports of second-hand goods. These policies appear contrary to the optimal choice of technique in developing countries, where low wages, small markets, and scarce technical skills would appear to call for use of more labor intensive smaller scale, and lower-tech machines. This paper examines data on US exports of new and used metalworking machine tools by type and by country of destination to investigate the determinants of used versus new machinery trade. The results indicate that technological factors, skill constraints, and market size may be more important than factor prices in determining the choice of machine. Trade restrictions on used machinery distort firms' investment decisions. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd. 1998.
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Suggested Citation

  • G. Barba Navaretti & I. Soloaga & W. Takacs, 1996. "Bargains Rejected? Developing Country Trade Policy on Used Equipment," Departmental Working Papers 1996-02, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:1996-02
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    Cited by:

    1. M. Florio, 1998. "Economic Theory, Russia and the Fading "Washington Consensus"," Departmental Working Papers 1998-08, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Sofronis Clerides, 2004. "Gains from Trade in Used Goods: Evidence from the Global Market for Automobiles," University of Cyprus Working Papers in Economics 6-2004, University of Cyprus Department of Economics.
    3. Massimo Florio & R. LUCCHETTI & F. QUAGLIA, 1998. "Grandi e piccole imprese nel Centro-Nord e nel Mezzogiorno: un modello empirico dell'impatto occupazionale nel lungo periodo," Departmental Working Papers 1998-02, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Massimo Florio & Anna Giunta, 1998. "Planning Contracts in Southern Italy, 1986-1997: a Prelimary Evaluation," Departmental Working Papers 1998-04, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    5. Giuseppe Bognetti, 1999. "Nuove forme di gestione dei servizi pubblici," Departmental Working Papers 1999-04, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

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