Trade restrictiveness and efficiency

Nancy Chau, Rolf F”re and Shawna Grosskopf

International Economic Review, 2003, vol. 44, issue 3, 1079-1095

Abstract: This article proposes a trade restrictiveness quantity index (TRQI) to measure the welfare impact of trade restrictions based on a distance functions approach. The TRQI embodies two Farrell measures of efficiency-respectively for producers and consumers-that can be computed using standard efficiency measurement techniques. The TRQI can also be decomposed into a trade distortion and domestic distortion component. In the context of the debate on the interlinkages between openness and economic performance, the TRQI offers a means to disentangle economic inefficiencies induced by trade restrictions alone, from otherwise not directly trade-related economic inefficiencies induced by domestic distortions. Copyright 2003 By The Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Date: 2003
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