Year: 2002
Title:
Effects of Tariffication: Tariffs, Quotas and VERs under Monopolistic Competition
JEL: F12, F13
Authors:
J.G. J¿rgensen, University of Southerns Denmark
P.J.H. Schršder, DIW Berlin
Abstract:
Recent rounds of GATT and later WTO have advocated widespread tariffication, meaning that existing non-tariff barriers be converted into import equivalent tariffs. From an economic point of view, the effects of such tariffication are not entirely clear. The paper presents a general equilibrium model with monopolistic competition to examine the welfare effects of tariffication. The ranking of pre- and post-tariffication welfare depends crucially on the nature of the initial trade barrier and the tariff tool applied. Tariffication using a specific (an ad valorem) tariff results in the same (a reduced) welfare level compared to an initial quota, whereas welfare is increased (the same) compared to an initial VER.
Keywords:
Trade policy, tariffication, specific tariff, ad valorem tariff, quota, VER
Contact address: pschroeder at diw.de
Paper URL: http://www.diw.de/deutsch/publikationen/diskussionspapiere/docs/papers/dp269.pdf
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