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Tariffication of a Distorted Economy: A CGE Analysis
Author(s) -
Kaempfer William H.,
Ross Martin T.,
Rutherford Thomas F.
Publication year - 1997
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/1467-9361.00014
Subject(s) - economics , computable general equilibrium , welfare , monopoly , transparency (behavior) , context (archaeology) , international economics , liberalization , free trade , revenue , wage , international trade , macroeconomics , microeconomics , market economy , paleontology , accounting , biology , political science , law
This paper examines the consequences of the tariffication of a quota when there are several potential distortions present in a country, including domestic monopoly and wage rigidities. It is generally presumed that tariffs are superior to quotas because of their transparency and revenue‐raising attributes. However, in the presence of multiple distortions, liberalization of a single policy instrument may result in net welfare losses. The findings suggest that, in a general equilibrium context, such a liberalization policy will have ambiguous effects upon aggregate domestic welfare in the country undertaking the tariffication.