International trade: theory and evidence

This is a textbook (out of print and copyright reverted to authors) that design for a one-semester course in international trade theory at the advanced undergraduate or beginning graduate level. It systematically examines alternative causes of trade and the consequence of each. A much revised version is due to be published in 2011.International trade; gains from trade;

International trade: theory and evidence

This is a textbook (out of print and copyright reverted to authors) that design for a one-semester course in international trade theory at the advanced undergraduate or beginning graduate level. It systematically examines alternative causes of trade and the consequence of each. A much revised version is due to be published in 2011

Tariffs versus Quotas under Producer Rent Equivalence

The economic effects of tariffs and quotas used to protect a domestic monopolist from foreign imports have typically been contrasted by examining policies that yield an equivalent domestic price or level of imports. This paper emphasizes an alternative criterion for equivalence—domestic producer rent equivalence—which is especially useful for political economy analysis. We generalize earlier results for the small-country case to large countries, and show that a quota will allow more imports, but at a higher price, than the tariff that generates an identical level of domestic producer rent. The welfare ranking of the two instruments is in general indeterminate. However, the domestic deadweight costs of the tariff are necessarily lower than those of the quota in the neighborhood of the free-trade equilibrium. On the other hand, the costs imposed on foreign producers are always lower under the quota than under the tariff; Finally, as the level of protection increases--due to a downward shift in foreign costs, with domestic producer rent held constant-- the quota is associated with a smaller increase in domestic opportunity cost than is the tariff. Thus, persistent increases in the international value of the domestic currency, or erosion of comparative advantage in the domestic industry, should eventually make the quota the more efficient policy

Income Inequality and Tax Policy for South African Race Groups

This paper calculates elasticities of demand for race groups in South Africa, government-revenue-maximizing tax rates, and excess burdens associated with taxes. A change in tax policy can be the political engine of income redistribution with appropriate taxes and subsidies on different commodities. This paper compares both semiparametric and parametric estimators with the censored least absolute deviation and censored maximum likelihood in calculating demand equations and elasticities. It is found that cigarettes and milk are the two commodities that generate the most government revenues from whites per unit of government revenues from blacks. © 2003 President and Fellows of Harvard College and the Massachusetts Institute of Technology.