Trade Liberalisation and Shadow Prices in the Presence of Tariffs and Quotas

J. Peter Neary

International Economic Review, 1995, vol. 36, issue 3, 531-54

Abstract: This paper examines the welfare effects of trade liberalization and economic growth in an economy which is large enough to influence world prices and in which trade is restricted by both tariffs and quotas. The author derives general expressions for shadow prices of goods and foreign exchange and uses them to generalize the standard radial reduction and concertina reform results. He also derives a general expression for shadow prices of factors of production and uses it to synthesize the classic results of J. N. Bhagwati and H. G. Johnson on immiserizing growth. Finally, the author develops a new geometric technique to illustrate the results. Copyright 1995 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 1995
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Working Paper: Trade Liberalization and Shadow Prices in the Presence of Tariffs and Quotas (1989)
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