Cost of Protection of the U. S. Wool Sector

Edith Crammatte and Rachel Dardis

The Economic Record, 1970, vol. 46, issue 1, 96-106

Abstract: The present system of protection of the U. S. wool sector affords an opportunity for examining the interdependence of intermediate and final goods sectors when both are protected. It also illustrates the cumulative nature of protective devices. In this study an intermediate good model is employed to investigate the cost to the United States of maintaining the present method of protection for raw wool and wool products1. The concept of a net tariff is utilized to represent the actual protection afforded to a final good when its inputs are also protected. This net tariff is related to the effective protective rate which has been frequently mentioned in the literature. It is, however, more useful when the question of cost allocation between sectors is under consideration. The intermediate good model also permits an estimation of the gain from the removal of protection in either the raw wool or wool products sector as well as an estimation of the gain from adopting alternative methods of protection such as deficiency payments.

Date: 1970
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