Optimal Trade Policies for a Developing Country Under Uncertainty

Eun Choi and Harvey Lapan

No 51263, Working Papers from International Agricultural Trade Research Consortium

Abstract: This paper investigates optimal trade policies for a developing small open economy which faces international price uncertainty. Trade taxes are used to finance provision of a public good, which enters the utility function of consumers. If demands for private goods are independent of the public good, the optimal composite tariff dominates the optimal quota. If the optimal state-contingent tariff increases with the foreign price, the optimal specific tariff also dominates the optimal quota, regardless of risk aversion. However, the ranking of the optimal specific tariff and the optimal quota generally depends on risk attitudes as well as ordinal preferences.

Keywords: International; Relations/Trade (search for similar items in EconPapers)
Pages: 31
Date: 1990
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Related works:
Journal Article: Optimal trade policies for a developing country under uncertainty (1991)
Working Paper: Optimal Trade Policies for a Developing Country under Uncertainty (1991)
Working Paper: Optimal Trade Policies for a Developing Country under Uncertainty (1991)
Working Paper: Optimal Trade Policies for a Developing Country Under Uncertainty (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:iatrwp:51263

DOI: 10.22004/ag.econ.51263

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