Equity and Trade Policy
Joseph Francois and
Hugo Rojas-Romagosa ()
No 20070501, IIDE Discussion Papers from Institue for International and Development Economics
We develop a dual approach to analyzing general equilibrium relationships between trade policy and household (as distinct from functional) income distribution, highlighting how general equilibrium distributional aspects of social welfare related to import protection may be examined alongside corresponding efficiency aspects in a dual framework. This includes the introduction of a social welfare function into the dual GE system that is explicitly separable between mean income and income dispersion. This then follows through to the government ob jective function. For government, this is manifested not only in special interest politics, but also through the direct impact of inequality on a governmentÕs ob jective function. We find that equity considerations may serve to counter lobbying interests in both capital-rich and capital-poor countries, though with an opposite marginal impact on the final policy outcome. We also identify a protectionist bias on the part of welfare maximizing governments in capital-rich countries. Our dual framework also offers a possible empirical framework for decomposition of policy-induced price changes into household inequality for a broad class of models.
Keywords: Trade and inequality; Sen welfare functions; duality; political economy of equity (search for similar items in EconPapers)
JEL-codes: F13 O15 D31 D72 (search for similar items in EconPapers)
Pages: 36 pages
New Economics Papers: this item is included in nep-dev, nep-int and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:lnz:wpaper:20070501
Access Statistics for this paper
More papers in IIDE Discussion Papers from Institue for International and Development Economics Contact information at EDIRC.
Bibliographic data for series maintained by iide webmaster ( this e-mail address is bad, please contact ).