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Distributional Effects of Tariff Reduction in the Transforming Chinese Economy
Author(s) -
Chow Lapkei,
Fung Michael Kayiu,
Zhu Lijing
Publication year - 1999
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/1468-0106.00067
Subject(s) - tariff , economics , redistribution (election) , general equilibrium theory , redistribution of income and wealth , international economics , macroeconomics , politics , political science , law , unemployment
A general equilibrium trade model is constructed to study the issue of income redistribution between the state sector and the private sector induced by a tariff reduction in the transforming Chinese economy. The analysis is conducted in the presence of price control, tariff protection, and the coexistence of state and private sectors. It is shown that the way in which income levels of the two sectors are affected by the tariff reduction depends on (i) the way in which the price of nontradables is affected, (ii) the degree of privatization, and (iii) the extent of price control.