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Trade restrictiveness and efficiency*
Author(s) -
Chau Nancy H.,
Färe Rolf,
Grosskopf Shawna
Publication year - 2003
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/1468-2354.t01-1-00101
Subject(s) - restrictiveness , openness to experience , economics , distortion (music) , context (archaeology) , index (typography) , measure (data warehouse) , welfare , econometrics , gains from trade , trade barrier , international economics , computer science , psychology , social psychology , amplifier , philosophy , linguistics , computer network , paleontology , bandwidth (computing) , database , world wide web , market economy , biology
This article proposes a trade restrictiveness quantity index (TRQI) to measure the welfare impact of trade restrictions based on a distance functions approach. The TRQI embodies two Farrell measures of efficiency—respectively for producers and consumers—that can be computed using standard efficiency measurement techniques. The TRQI can also be decomposed into a trade distortion and domestic distortion component. In the context of the debate on the interlinkages between openness and economic performance, the TRQI offers a means to disentangle economic inefficiencies induced by trade restrictions alone, from otherwise not directly trade‐related economic inefficiencies induced by domestic distortions.