The Theory of Trade Policy and Reform

Rodney Falvey and Udo Kreickemeier

Chapter 9 in Palgrave Handbook of International Trade, 2013, pp 265-294 from Palgrave Macmillan

Abstract: Abstract Historically, trade taxes have been an important source of government revenue in subsistence-oriented economies with large informal sectors. As countries developed and economic activity became more market-oriented, governments sourced revenue from broader, more efficient tax bases. But trade taxes remained, with protection of domestic import-competing activity, rather than revenue, becoming their primary motivation. This shift of motivation also facilitated the substitution of alternative policies, quantitative restrictions for example, which would limit import competition without necessarily generating revenue.

Keywords: Trade Policy; Tariff Rate; Domestic Price; World Market Price; World Price (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1007/978-0-230-30531-1_9

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