Optimal Tariffs: The Evidence

David Weinstein, Limão, Nuno and Christian Broda
Authors registered in the RePEc Author Service: Nuno M. Limão

No 5540, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The theoretical debate over whether countries can and should set tariffs in response to export elasticities goes back over a century to the writings of Edgeworth (1894) and Bickerdike (1907). Despite the optimal tariff argument's centrality in debates over trade policy, there exists no evidence about whether countries actually apply it when setting tariffs. We estimate disaggregate export elasticities and find evidence that countries that are not members of the World Trade Organization systematically set higher tariffs on goods that are supplied inelastically. The result is robust to the inclusion of political economy variables and a variety of model specifications. Moreover, we find that countries with higher aggregate market power have on average higher tariffs. In short, we find strong evidence in favour of the optimal tariff argument.

Keywords: Wto; Gatt; International trade; Optimal tariffs; Trade policy (search for similar items in EconPapers)
JEL-codes: F13 F14 H21 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-int, nep-mic and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://cepr.org/publications/DP5540 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Working Paper: Optimal Tariffs: The Evidence (2006)
Working Paper: Optimal Tariffs: The Evidence (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:5540

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP5540

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().