Correcting trade distortions in a small open economy

Lahiri, S. & Raimondos-Møller, Pascalis (1996) Correcting trade distortions in a small open economy. Review of International Economics, 4(3), pp. 287-299.

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This paper considers the second-best strategy of correcting a wide variety of trade distortions in a small open economy with perfect competition in all markets. Using the tools of duality, we obtain some general properties of the structure and the levels of the optimal taxlsubsidy rates. The paper also analyzes the welfare effects of unilateral piecemeal trade policy reforms when some of the quota distortions—imposed by the foreign countries—are unalterable. It is shown that the merits of unilateral trade policy reforms that are emphasized in the literature crucially depend on the absence of unalterable foreign imposed quotas.

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ID Code: 94015
Item Type: Journal Article
Refereed: Yes
ISSN: 0954-1985
Copyright Owner: Copyright 1996 Wiley-Blackwell Publishing Ltd.
Deposited On: 22 Mar 2016 04:44
Last Modified: 22 Mar 2016 04:45

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