Contingent Protection as Better Insurance / Ronald D. Fischer, Thomas J. Prusa.

Format:

Book

Author/Creator:

Fischer, Ronald D.

Contributor:

National Bureau of Economic Research.

Prusa, Thomas J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6933.

NBER working paper series no. w6933

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1999.

Summary:

We formalize the notion that GATT exceptions such as antidumping and escape clause actions can act as insurance for import competing sectors affected by adverse price shocks. We use a general equilibrium model with several import competing sectors and assume incomplete markets so that agents cannot contract insurance. We show that these measures are superior to uniform tariffs as insurance mechanisms. Moreover, we demonstrate that the optimal uniform policy may not involve a tariff at all, but rather might entail an export tax. We also show that a tax cum subsidy policy (i.e., taxing all sectors in order to subsidize the shocked sector) improves welfare.

Notes:

Print version record

February 1999.