Cadogan, Godfrey (2010): A Trade Policy Perspective On Import Quotas And The Substitution Effect.
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This paper focuses on the necessary conditions required in order to exploit the substitution effect which arises when there is a shift in demand induced by import quotas under imperfect competition. The protective policy succeeds if the substitution effect shifts in favor of goods produced by the domestic industry and this shift offsets foreign firms quota rents and the decrease in consumer welfare. While extant literature tends to focus on welfare loss associated with import quotas, in this paper social welfare analytics are produced and a trade policy decision rule for net welfare gain is obtained.
|Item Type:||MPRA Paper|
|Original Title:||A Trade Policy Perspective On Import Quotas And The Substitution Effect|
|Keywords:||Import quota, social welfare, substitution effect, trade policy decision rule.|
|Subjects:||F - International Economics > F1 - Trade > F13 - Trade Policy; International Trade Organizations
F - International Economics > F1 - Trade > F10 - General
F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies
|Depositing User:||godfrey cadogan|
|Date Deposited:||15. Oct 2010 00:23|
|Last Modified:||15. Feb 2013 23:28|
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