Trade Restrictiveness and Efficiency

17 Pages Posted: 10 Jul 2003

See all articles by Nancy H. Chau

Nancy H. Chau

Cornell University - School of Applied Economics and Management; IZA Institute of Labor Economics

Rolf Färe

Oregon State University - Department of Economics

Shawna Grosskopf

Oregon State University

Abstract

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.

Suggested Citation

Chau, Nancy H. and Färe, Rolf and Grosskopf, Shawna, Trade Restrictiveness and Efficiency. International Economic Review, Vol. 44, pp. 1079-1095, August 2003. Available at SSRN: https://ssrn.com/abstract=422991

Nancy H. Chau (Contact Author)

Cornell University - School of Applied Economics and Management ( email )

Ithaca, NY 14853
United States
607-255-4463 (Phone)
607-255-9984 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Rolf Färe

Oregon State University - Department of Economics ( email )

303 Ballard Extension Hall
Corvallis, OR 97331
United States
541-737-8184 (Phone)
541-737-5917 (Fax)

Shawna Grosskopf

Oregon State University ( email )

303 Ballard Extension Hall
Corvallis, OR 97331
United States
541-737-8184 (Phone)

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