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Welfare vs. Market Access: The Implications of Tariff Structure for Tariff ReformJames E. AndersonBoston College - Department of Economics; National Bureau of Economic Research (NBER) J. Peter NearyUniversity of Oxford - Department of Economics; Centre for Economic Policy Research (CEPR) September 2004 NBER Working Paper No. W10730 Abstract: We show that the effects of tariff changes on welfare and import volume can be fully characterized by their effects on the generalized mean and variance of the tariff distribution. Using these tools, we derive new results for welfare- and market-access-improving tariff changes, which imply two 'cones of liberalization' in price space. Because welfare is negatively but import volume positively related to the generalized variance, the cones do not intersect, which poses a dilemma for trade policy reform. Finally, we show that generalized and trade-weighted moments are mutually proportional when the trade expenditure function is CES.
Number of Pages in PDF File: 47 JEL Classification: F13 working papers seriesDate posted: September 20, 2004Suggested CitationContact Information
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