IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/25862.html
   My bibliography  Save this paper

A Trade Policy Perspective On Import Quotas And The Substitution Effect

Author

Listed:
  • Cadogan, Godfrey

Abstract

This paper focuses on the necessary conditions required in order to exploit the substitution effect which arises when there is a shift in demand induced by import quotas under imperfect competition. The protective policy succeeds if the substitution effect shifts in favor of goods produced by the domestic industry and this shift offsets foreign firms quota rents and the decrease in consumer welfare. While extant literature tends to focus on welfare loss associated with import quotas, in this paper social welfare analytics are produced and a trade policy decision rule for net welfare gain is obtained.

Suggested Citation

  • Cadogan, Godfrey, 2010. "A Trade Policy Perspective On Import Quotas And The Substitution Effect," MPRA Paper 25862, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25862
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/25862/1/MPRA_paper_25862.pdf
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    as
    1. Anderson, John E., 1985. "On testing the convexity of hedonic price functions," Journal of Urban Economics, Elsevier, vol. 18(3), pages 334-337, November.
    2. James Levinsohn & Steven Berry & Ariel Pakes, 1999. "Voluntary Export Restraints on Automobiles: Evaluating a Trade Policy," American Economic Review, American Economic Association, vol. 89(3), pages 400-430, June.
    3. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Import quota; social welfare; substitution effect; trade policy decision rule.;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:25862. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/vfmunde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.