Effects of Tariffication: Tariffs, Quotas and VERs under Monopolistic Competition
Jan Jørgensen and
No 269, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research
Recent rounds of GATT and later WTO have advocated widespread tariffication, meaning that existing non-tariff barriers be converted into import equivalent tariffs. From an economic point of view, the effects of such tariffication are not entirely clear. The paper presents a general equilibrium model with monopolistic competition to examine the welfare effects of tariffication. The ranking of pre- and post-tariffication welfare depends crucially on the nature of the initial trade barrier and the tariff tool applied. Tariffication using a specific (an ad valorem) tariff results in the same (a reduced) welfare level compared to an initial quota, whereas welfare is increased (the same) compared to an initial VER.
Keywords: Trade policy; tariffication; specific tariff; ad valorem tariff; quota; VER (search for similar items in EconPapers)
JEL-codes: F2 F12 F13 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwwpp:dp269
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