Tariffication of a Distorted Economy: A CGE Analysis

REVIEW OF DEVELOPMENT ECONOMICS

Posted: 4 Apr 1997

See all articles by William H. Kaempfer

William H. Kaempfer

University of Colorado at Boulder - Department of Economics

Martin T. Ross

University of Colorado

Thomas F. Rutherford

Centre for Energy Policy and Economics

Abstract

This paper examines the consequences of the tariffication of a quota when there are several potential distortions present in a country, including domestic monopoly and wage rigidities. It is generally presumed that tariffs are superior to quotas because of their transparency and revenue-raising attributes. However, in the presence of multiple distortions, liberalization of a single policy instrument may result in net welfare losses. The findings suggest that, in a general equilibrium context, such a liberalization policy will have ambiguous effects upon aggregate domestic welfare in the country undertaking the tariffication.

JEL Classification: C68, D42, F12

Suggested Citation

Kaempfer, William H. and Ross, Martin T. and Rutherford, Thomas F., Tariffication of a Distorted Economy: A CGE Analysis. REVIEW OF DEVELOPMENT ECONOMICS, Available at SSRN: https://ssrn.com/abstract=4799

William H. Kaempfer (Contact Author)

University of Colorado at Boulder - Department of Economics ( email )

Campus Box 256
Boulder, CO 80309-0256
United States
303-492-4486 (Phone)
303-492-8960 (Fax)

Martin T. Ross

University of Colorado ( email )

1070 Edinboro Drive
Boulder, CO 80309
United States

Thomas F. Rutherford

Centre for Energy Policy and Economics ( email )

ETH-Zentrum
Zurich, CH-8092
United States
+41 (0)44/632 6359 (Phone)
+41 (0)44/632 1622 (Fax)

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