Welfare Effects of Protection and Economies of Scale - The Case of The Australian Automotive Industry
The existence of economies of scale requires different interpretations of the welfare effect of protection on the industry from conventional analyses. This paper finds that the Australian automotive industry has economies of scale, and carries out relevant welfare analysis of tariff. Using the fully modified Phillips-Hansen method, the paper estimates long-run elasticities and changes in consumer and producer surplus by tariffs. With the presence of economies of scale, it is reported that the net deadweight effect of tariffs is relatively small, while the redistribution effects of tariffs are substantial. Also, it is found that the argument that tariffs protect domestic employment is not plausible in the Australian automotive case, due to the existence of economies of scale.
|Date of creation:||2002|
|Date of revision:|
|Contact details of provider:|| Postal: 35 Stirling Highway, Crawley, W.A. 6009|
Phone: (08) 9380 2918
Fax: (08) 9380 1016
Web page: http://www.business.uwa.edu.au/school/disciplines/economics
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Dixon, Peter B, 1978. "Economies of Scale, Commodity Disaggregation and the Costs of Protection," Australian Economic Papers, Wiley Blackwell, vol. 17(30), pages 63-80, June.
- Takacs, Wendy E, 1994. "Domestic Content and Compensatory Export Requirements: Protection of the Motor Vehicle Industry in the Philippines," World Bank Economic Review, World Bank Group, vol. 8(1), pages 127-49, January.
- Peter. Stubbs, 1972. "The Australian Motor Industry A Study in Protection and Growth," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 5(2), pages 51-51.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
- Peter Stubbs, 1972. "The Australian Motor Industry A Study in Protection and Growth," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 5(1), pages 46-46.
When requesting a correction, please mention this item's handle: RePEc:uwa:wpaper:02-11. 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: (Verity Chia)
If references are entirely missing, you can add them using this form.