Designing Policies to Open Trade

28 Pages Posted: 27 Apr 2000 Last revised: 23 Jan 2002

See all articles by Robert C. Feenstra

Robert C. Feenstra

University of California, Davis - Department of Economics; National Bureau of Economic Research (NBER)

Tracy R. Lewis

Duke University, Fuqua School of Business-Economics Group; National Bureau of Economic Research (NBER); Duke University - Department of Economics; Duke Innovation & Entrepreneurship Initiative

John McMillan

CESifo (Center for Economic Studies and Ifo Institute)

Date Written: February 1990

Abstract

In this paper we consider recent proposals to auction U.S. import quotas. using the funds so obtained to encourage relocation out of the protected industries. We argue that the information available to the government, or lack thereof, is a critical factor in understanding these policies. In a world or full information, it makes little sense to use auction quotas rather than tariffs. Similarly, it is unclear why an elaborate program of temporary protection is needed, rather than immediately opening trade and compensating people with an income transfer. When the government has Limited information, however, these policies become quite sensible and may even be optimal.

Suggested Citation

Feenstra, Robert C. and Lewis, Tracey R. and McMillan, John, Designing Policies to Open Trade (February 1990). NBER Working Paper No. w3258. Available at SSRN: https://ssrn.com/abstract=226704

Robert C. Feenstra (Contact Author)

University of California, Davis - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Tracey R. Lewis

Duke University, Fuqua School of Business-Economics Group ( email )

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National Bureau of Economic Research (NBER)

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Duke University - Department of Economics ( email )

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Duke Innovation & Entrepreneurship Initiative ( email )

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John McMillan

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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