Trade policy and economic welfare

Contents......Page 14
1. INTRODUCTION......Page 18
1.1 Three Stages of Thought......Page 19
1.2 The Scope of the Book......Page 21
1.3 Readers\' Guide......Page 23
2.1 A Simple Model: Marginal Divergence and the Optimum Subsidy......Page 24
2.2 By-product Distortion Effect of Tariff......Page 26
2.3 Elaborations of the Simple Analysis......Page 28
2.4 The Second-best Optimum Tariff......Page 31
2.5 Marginal Divergence in Factor Cost......Page 33
2.6 General Equilibrium and Many Commodities......Page 34
2.7 Home-market Bias......Page 35
2.8 The Hierarchy of Policies......Page 38
2.9 Trade Divergences......Page 40
Appendix 2.1: The Theory of Domestic Divergences in Two-product Geometry......Page 43
Appendix 2.2: The Theory of Domestic Divergences: Notes on the Literature......Page 49
3. THE FOUR ASSUMPTIONS OF THE THEORY OF DOMESTIC DIVERGENCES......Page 50
3.1 By-product Distortion Costs of Revenue-raising: Subsidies Remain First-best......Page 51
3.2 Collection Costs......Page 52
3.3 By-product Costs of Revenue-raising: The Need for \'Trading-off\'......Page 53
3.4 Subsidy Disbursement Costs......Page 54
3.5 Income Distribution Effects and the Theory of Domestic Divergences......Page 56
3.6 Income Redistribution Not Costless......Page 57
3.7 Illusions and an Imperfect World......Page 59
4. TRADE TAXES AS SOURCES OF GOVERNMENT REVENUE......Page 62
4.1 Some Simple Principles of Optimum Taxation......Page 63
4.2 The Importance of Collection Costs......Page 66
4.3 Smuggling and Underinvoicing......Page 68
4.4 The Optimum Tariff Structure: The Marginal Cost of Raising Revenue......Page 70
4.5 Export Taxes......Page 74
4.6 The Declining Importance of Trade-Tax Revenue in the Process of Economic Development......Page 75
5. PROTECTION AND INCOME DISTRIBUTION......Page 78
5.1 The Effects of Protection on Income Distribution......Page 80
5.2 The Stolper-Samuelson Model......Page 81
5.3 The Conservative Social Welfare Function......Page 89
5.4 Senescent Industry Protection and Adjustment Assistance......Page 93
5.5 Interregional Income Distribution......Page 95
6. THE TERMS OF TRADE ARGUMENT FOR TAXES ON TRADE......Page 98
6.1 The Optimum Trade Tax in the Two-sector Model......Page 99
6.2 Multicommodity Model......Page 105
6.3 Private Monopoly......Page 106
6.4 Foreign Reaction and Retaliation......Page 107
6.5 Growth and the Terms of Trade......Page 110
6.6 Practical Significance of the Terms-of-trade Argument......Page 112
Appendix 6.1: The Optimum Export Tax and Optimum Tariff......Page 117
7.1 The Effects of Protection on Monopoly Profits......Page 122
7.2 Fragmentation of Production......Page 128
7.3 Tariffs and Market Structure......Page 131
7.4 Made-to-measure Tariffs......Page 134
7.5 The X-efficiency Effects of Protection and Monopoly......Page 137
7.6 The Rent-seeking Society......Page 143
7.7 Dumping......Page 145
8. THE INFANT INDUSTRY ARGUMENT......Page 156
8.1 Dynamic Internal Economies......Page 157
8.2 Dynamic External Economies......Page 163
8.3 The Mill-Bastable Test......Page 168
8.4 Wide Application of the Infant Industry Argument......Page 170
8.5 The Problem of Investment Coordination......Page 171
8.6 Economies of Scale and the Pseudo-Infant Industry Argument......Page 173
8.7 Research and Development, and the Protection of Advanced Technology Industries......Page 175
9.1 The Real Income Effect of Protection on Savings and Investment......Page 179
9.2 Savings and the Income Distribution Effects of Protection......Page 182
9.3 Cheap Imported Capital Goods, Investment and Employment......Page 184
9.4 Consumption Postponement and the Demonstration Effect......Page 191
9.5 The Inducement to Invest and Backward Linkage......Page 192
9.6 Learning and the Rate of Growth......Page 196
10. SOME DYNAMIC ASPECTS OF TRADE POLICY......Page 198
10.1 The Anticipation of Price Changes......Page 199
10.2 Fluctuations in Export Earnings......Page 200
10.3 Risk Avoidance......Page 202
10.4 The Cost of Protection and the Rate of Growth......Page 205
10.5 The \'Dynamic\' Effects of Trade on Knowledge......Page 207
11. PROTECTION AND FOREIGN INVESTMENT......Page 210
11.1 The Effect of Protection on Foreign Capital Inflow......Page 211
11.2 Taxation of Foreign Investment......Page 213
11.3 Tariffs as Second-best Taxes or Subsidies on Foreign Capital......Page 222
11.4 The Effects of a Given Tariff System on the Gains or Losses from Foreign Investment......Page 224
11.5 Multinational Corporations......Page 225
12. OPTIMAL TARIFF DISMANTLING......Page 232
12.1 Some Tariffs are not Alterable......Page 233
12.2 Concertina Method......Page 234
12.3 Across-the-Board Reduction......Page 235
12.4 Tariff Dismantling and the Exchange Rate......Page 236
13.1 Trade Liberalization and the Environment: Small Country Case......Page 239
13.2 Environmental Policy Interaction: Multicountry Case but no Transborder Pollution......Page 248
13.3 Transborder Externalities and Global Public Goods......Page 253
13.4 Capital Mobility and Capital Controls......Page 257
13.5 Summary: The Role of Trade Policy......Page 259
14.1 Oligopoly and Strategic Trade Policy......Page 261
14.2 Industrial Policy......Page 272
14.3 Japanese Industrial Policy: What Difference Did It Make?......Page 275
15.1 Trade Liberalization Requires Depreciation......Page 279
15.2 The Basic Theory......Page 280
15.3 Exchange Rate Protection......Page 284
15.4 Capital Inflow and the Real Appreciation Problem......Page 285
15.5 Real Wage Rigidity and a Balance-of-payments Problem......Page 288
15.6 How Protection Affects the Current Account......Page 290
15.7 The Fixed Exchange Rate Regime: What Role for Protection?......Page 292
15.8 Summary......Page 294
16. CONCLUSION......Page 295
Bibliography......Page 302
L......Page 314
Y......Page 315
F......Page 316
P......Page 317
X......Page 318