Anti-trade Bias in Trade Policy and General Equilibrium
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Nuno Limao
An important question that has continued to elude trade economists is why trade interventions are biased in favor of import-competing rather than exportable sectors. Indeed, as Philip Levy (1999) points out, under a set of neutrality assumptions, the dominant political-economy model, Grossman and Helpman (1994), predicts a pro-trade bias. We demonstrate that if we replace the almost partial equilibrium model with a general equilibrium model in the Grossman-Helpman political economy model, anti-trade bias may emerge even if we assume symmetric technologies, endowments and preferences across sectors provided that the elasticity of substitution in production exceeds unity. In addition, we show that ceteris paribus, in general equilibrium, increases in the imports-to-GDP ratio lower the endogenously chosen tariff and the production share of the import sector in GDP has an ambiguous effect.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Contributions Article
- Contestable Licensing
- Willingness to Pay for Environmental Quality: Testable Empirical Implications of the Growth and Environment Literature
- Why Do the Poor and the Less-Educated Pay More for Long-Distance Calls?
- A Model of Welfare-Reducing Settlement
- How Does Job Loss Affect the Timing of Retirement?
- Information, the Introduction of Roths, and IRA Participation
- Willingness to Pay for Environmental Quality: Testable Empirical Implications of the Growth and Environment Literature: Comment
- Quantity Controls, License Transferability, and the Level of Investment
- Instrumental Variables for Binary Treatments with Heterogenous Treatment Effects: A Simple Exposition
- Do Parents Value Changes in Test Scores? High Stakes Testing in Texas
- Law Serials Pricing and Mergers: A Portfolio Approach
- Racial Bias in Motor Vehicle Searches: Additional Theory and Evidence
- Poverty Measurement Under Risk Aversion Using Panel Data
- Anti-trade Bias in Trade Policy and General Equilibrium
- Race and the Digital Divide
- Cost Recovery, Efficiency, and Economic Organization for Water Utilities
- A Minimum of Rivalry: Evidence from Transition Economies on the Importance of Competition for Innovation and Growth
- Selective Enforcement of Copyright as an Optimal Monopolistic Behavior
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