Rules of Origin as Commercial Policy Instruments

Rodney Falvey and Geoff Reed
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Geoff Reed: University of Nottingham, U.K.

International Economic Review, 2002, vol. 43, issue 2, 393-408

Abstract: This article examines the role of rules of origin as a commercial policy instrument that targets the input composition of imports. Using a three-country, partial equilibrium structure, we demonstrate conditions under which the imposition of a binding rule will be welfare improving for an importer facing competitive export suppliers. We further show that employing rules of origin in this way would be complementary to, rather than a substitute for, conventional optimal tariffs. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association

Date: 2002
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