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Effective Protection Redux

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  • James E. Anderson

Abstract

This paper rehabilitates the concept of effective rate of protection for use in political economy. The usual definition corresponds to no economically interesting magnitude in general equilibrium. The effective rate of protection for a sector is redefined here as the uniform tariff which is equivalent to the actual differentiated tariff structure in its effect on rents to residual claimants in the sector. The new ERP permits a political economic ranking of across sectors, since higher uniform tariff equivalents imply higher losses of welfare sacrificed to interest groups. The new ERP converges to the old ERP under a very special set of assumption, and elsewhere generalizes the ERP concept to any economic structure in which residual claims are defined. Numerical results for the new ERP are presented for the US economy in 1982 using the USDA/ERS computable general equilibrium model. The calculated old and new ERP's are not significantly correlated.

Suggested Citation

  • James E. Anderson, 1996. "Effective Protection Redux," NBER Working Papers 5854, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5854
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    Cited by:

    1. Ronald Fischer, "undated". "Trade liberalization in Latin America: The case of Chile," Documentos de Trabajo 190, Centro de Economía Aplicada, Universidad de Chile.
    2. Evans, Lewis & Richardson, Martin, 2002. "Trade Reform in New Zealand: Unilateralism at Work," Working Paper Series 3934, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    3. Sorin BURNETE, 2017. "Outsourcing under Threat: Estimated Impact of Potential Tariffs on US Imports from Mexico," Expert Journal of Economics, Sprint Investify, vol. 5(3), pages 88-97.
    4. kishore gawande & pravin krishna, 2005. "The Political Economy of Trade Policy: Empirical Approaches," International Trade 0503003, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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