Redistribution, state trading enterprises and politically optimal tariffs

Steve McCorriston and Donald MacLaren

Canadian Journal of Economics, 2013, vol. 46, issue 4, 1351-1379

Abstract: State trading enterprises (STEs) are widely used and can be viewed as instruments of trade policy. We analyse two aspects: the first is their potential trade distorting effect; the second is how they modify the case for the politically optimal tariff. We show that the STE can reduce the need for a tariff designed for domestic redistribution. This result introduces some ambiguity about how STEs are interpreted: from a multilateralist perspective, they should be dealt with in the same way as other nontariff barriers; from a nationalistic perspective, they can reduce the need for politically optimal.

JEL-codes: F12 F13 (search for similar items in EconPapers)
Date: 2013
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