Can Protectionist Trade Measures Make a Country Better-off? (original) (raw)
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Journal of Business Research, 2002
Intensified international competition induces many firms to seek government protection. The interests of firms, however, may not be in line with the interests of their country as a whole. Pressures to employ protectionist measures may result in net welfare losses. Some policies intended to protect domestic firms, however, may offer little protection but result in welfare increases. In this paper, we explore the welfare impacts and protection levels provided by the imposition of quantitative restrictions and minimum quality standards (MQSs). We show that, unlike quantity restrictions, MQSs can improve a country's welfare. Furthermore, they can increase the world's welfare and thus cannot be regarded as non-tariff trade barriers (NTBs). A marginal increase in MQS favors importers and not the domestic producers. A large increase may lead to losses by all producers (domestic and foreign) but result in gains by consumers sufficiently high to compensate for the loss of profits by producers.
Minimum quality levels and import tariffs
2003
In a vertically differentiated duopoly the use of import tariffs by an importing country decreases domestic welfare if import tariffs are chosen once the firms have made their quality decisions. In this paper we propose import tariffs that are contingent on some minimum quality level (MQL) being met. A firm is taxed if it fails to meet these MQL. Import tariffs conditional on fulfilling the MQL are welfare improving over free trade. Investment in quality increases, market coverage goes up and consumer surplus increases. Firm profits decrease relative to free trade under such tariffs.
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Journal of International Economics, 1989
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Market Access and Minimum Quality Standards
Nº.: UC3M Working Paper. Economics 2004 …, 2004
In this paper we analyze market access blocking properties of a Minimum Quality Standard (MQS). For an importing country that imports a high and low quality good, the welfare maximizing optimal MQS limits market access only to the high quality firm. This result is further confirmed for a uniform MQS imposed by a high quality producing country that imports a low quality good. The optimal MQS in this case always blocks entry to the low quality foreign firm.
IMPORT TARIFFS, QUALITY INVESTMENT AND WELFARE
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Abstract: In this paper we study incentives for a government to impose a discriminatory or uniform import tariff on its low and high quality imports. In comparison to free trade both tariffs decrease total welfare. In response to any tariff, firms decrease quality investment and total output ...
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Journal of International Economics, 1987
This paper analyzes the effects and desirability of tariffs, quotas and quality controls, when the quality of the imported good is endogenous, and the foreign producer is a monopolist. A crucial determinant of the direction of these effects is shown to be the valuation of increments in quality by the marginal consumer, relative to that of all consumers on average. A way of comparing infinitesimal equivalent policies is developed and used to compare import equivalent policies.
Tariffs vs. Quotas with Endogenous Quality
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This paper analyzes some aspects of tile effects of trade restrictions (such as tariffs, quotas and quality controls) and their desirability when the quantity of the imported good is endogenous, and the foreign producer is a monopolist. It uses a fairly general model based on the work of Spence and Sheshinski.