Protection without Discrimination

Rebeyrol, Vincent

Protection without Discrimination

No 20-1131, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: This paper shows that Non-Tariff Measures (NTMs) may fully respect the non-discrimination principle of the WTO and still act as a protectionist device. NTMs that raise the costs of all firms induce some exit and thus reallocate market shares towards the most efficient firms. The paper analyzes when this mechanism generates protectionism. Introducing political economy motives in the model, this paper shows that trade liberalization increases the use of NTMs in the non-cooperative equilibrium. Moreover, a trade agreement may be welfare reducing if governments only care about the most efficient firms. A Pareto improving trade agreement may require an international income redistribution between countries if the firm productivity distribution differs across countries. These results may help explaining why recent trade negotiations face increasing opposition.

Keywords: Trade protection; Non-discrimination; WTO; domestic regulations (search for similar items in EconPapers)
JEL-codes: F02 F12 F13 (search for similar items in EconPapers)
Date: 2020-08-26
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Protection Without Discrimination (2023)
Working Paper: Protection Without Discrimination (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:tse:wpaper:124602

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