Modelling Economy-wide Effects of Future Automotive Assistance

Productivity Commission

in Research Reports from Productivity Commission, Government of Australia

Abstract: The Commission’s modelling indicates that there would be economy–wide benefits from further reductions in assistance to the automotive sector, particularly for tariffs. It also suggests that the benefits would be larger under the current assistance reduction program than options entailing lesser reductions. The model projected potential net benefits to the community of some $0.5 billion a year under this program, with gains to consumers and other industries outweighing negative impacts on the automotive industry. Modelling also confirms that a significant further appreciation of Australia’s currency, associated with the mining boom, would have a much greater impact on the automotive industry than scheduled tariff reductions. In the Commission’s assessment, these conclusions are not materially affected by consideration of factors, such as adjustment costs and scale economies, not captured directly by the model.

Keywords: car industry; automotive industry; industry assistance; tariffs; competition; exports (search for similar items in EconPapers)
Date: 2008
ISBN: 978-1-74037-255-8
Note: 150 pages
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http://www.pc.gov.au/__data/assets/pdf_file/0008/80765/automodelling.pdf (application/pdf)
http://www.pc.gov.au/projects/study/automodelling/finalreport (text/html)

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Persistent link: http://EconPapers.repec.org/RePEc:ris:prodcs:30

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