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Pitfalls in the theory of international trade policy : concertina reform of tariffs, and subsidies to high-technology industries

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  • J. Peter Neary

Abstract

This paper explores the links between international trade theory and the practice of trade and industrial policy in open economies, with special attention to three areas where theoretical lessons have been misunderstood in policy debates. I argue that the "concertina rule" for tariff reform justifies reductions in high tariffs but not moves towards uniformity and particularly not increases in low tariffs. I show that the basic principles of tariff reform are the same in unilateral, multilateral and customs union contexts. Finally, I suggest that the theory of strategic trade policy does not justify subsidies to high-technology industries.

Suggested Citation

  • J. Peter Neary, 1997. "Pitfalls in the theory of international trade policy : concertina reform of tariffs, and subsidies to high-technology industries," Working Papers 199726, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:199726
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    File URL: http://hdl.handle.net/10197/2979
    File Function: First version, 1997
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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