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Political economy arguments for uniform tariffs

Author

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  • Panagariya, Arvind
  • Rodrik, Dani

Abstract

During the 1980s the Bank aggressively promoted greater uniformity in tariffs in developing countries. The Bank's structural adjustment and trade reform programs have often recommended abolition of quantitative import restrictions and increased uniformity in tariffs. This report is a formal analysis of some political economy arguments for uniform tariffs. The authors present three models in which unifrom tariff rules may be adopted as a way of minimizing the welfare costs of endogenously determined tariffs. In the first two models, tariffs are demand determined : the government is essentially unable to resist the lobbying pressure. In the third model, tariffs are supply determined in the sense that they result from the government's preference for certain sectors over others. After examining the three models, the authors conclude that in each case it is possible for a uniform tariff regime to yield higher welfare than a regime in which tariffs can diverge across sectors.

Suggested Citation

  • Panagariya, Arvind & Rodrik, Dani, 1991. "Political economy arguments for uniform tariffs," Policy Research Working Paper Series 681, The World Bank.
  • Handle: RePEc:wbk:wbrwps:681
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    References listed on IDEAS

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