Rent-Seeking, Trade Policy and Economic Welfare
Tito Belchior Silva Moreira
Catholic University of Brasilia
Fernando A. R. Soares
Ministry of Finance, Brazil
December 30, 2010
Modern Economy, Vol. 2, pp. 30-37, 2011
The objective of this paper is to assess the impacts that rent-seeking arising from government intervention in international trade has on welfare. More specifically, the focus is on how the granting of special import regimes promotes rent-seeking practices, which have negative effects on welfare. We present two concepts of nominal protection: legal tariffs and the actual import tariffs. In addition, we construct three measures of welfare: from the legal tariff; from the actual import tariffs; and from the actual import tariffs when rent-seeking is present. Finally, we compare the various measures of protection in terms of their impact on welfare. The results show that trade policies based on exceptions - such as those establishing the special import regimes - tends to decrease welfare.
Number of Pages in PDF File: 8
Keywords: Legal Tariffs, Actual Import Tariffs, Welfare, Rent-Seeking
JEL Classification: F11Accepted Paper Series
Date posted: January 27, 2012
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