Tariff reform in the presence of sector-specific distortions

The problem of choosing second-best trade policies is modified by including sector-specific policies as well as tariffs. We obtain conditions under which reduction of the largest tariff is welfare improving. Formulae for the optimal tariff and sector-specific subsidy are used to study the design of optimal policy menus. The theory is illustrated by an empirical general equilibrium model of the U. S. economy which emphasizes agriculture. The model suggests that reductions in agricultural protection in the United States would be welfare improving.


Issue Date:
1990
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/6091
Total Pages:
27
Series Statement:
CUDARE Working Paper
497




 Record created 2017-04-01, last modified 2017-04-04

Fulltext:
Download fulltext
PDF

Rate this document:

Rate this document:
1
2
3
 
(Not yet reviewed)