Steepest Ascent Tariff Reforms

Alan Woodland and Pascalis Raimondos ()

No 04-2006, Working Papers from Copenhagen Business School, Department of Economics

Abstract: This paper introduces the concept of a steepest ascent tariff reform for a small open economy. By construction, it is locally optimal in that it yields the highest gain in utility of any feasible tariff reform vector of the same length. Accordingly, it provides a convenient benchmark for the evaluation of the welfare effectiveness of other well known tariff reform rules, as e.g. the proportional and the concertina rules. We develop the properties of this tariff reform, characterize the sources of the potential welfare gains from tariff reform, use it to establish conditions under which some existing reforms are locally optimal, provide geometric illustrations and compare welfare effectiveness of reforms using numerical examples. Moreover, being a general concept, we apply it to the issue of market access and examine its implications. Overall, the paper’s contribution lies in presenting a theoretical concept where the focus is upon the size of welfare gains accruing from tariff reforms rather than simply with the direction of welfare effects that has been the concern of the literature. JEL code: F15. Keywords: Steepest ascent tariff reforms; piecemeal tariff policy; welfare; market access; small open economy.

Keywords: Market access; tariff reform; consumption tax reform. (search for similar items in EconPapers)
JEL-codes: G10 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2006-01-01
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Citations: View citations in EconPapers (2)

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Journal Article: Steepest ascent tariff reform (2014)
Working Paper: Steepest Ascent Tariff Reforms (2006)
Working Paper: Steepest Ascent Tariff Reforms (2006)
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