Border Price Changes and Domestic Welfare in the Presence of Distortions: A Comment

Julian Alston and Will Martin

Oxford Economic Papers, 1995, vol. 47, issue 1, 79-82

Abstract: The welfare impacts of border price changes in the presence of distortions are always equal to the undistorted welfare impacts plus the induced change in the social costs of the pre-existing distortions. The results of Tyers and Falvey--in which welfare impacts of border price changes are determined by the direction of trade in the absence of the distortion and on the degree of price transmission--can be seen as special cases, conditional on the nature of the policy distortion and the functional form of the underlying relationship. Copyright 1995 by Royal Economic Society.

Date: 1995
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