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TRADE LIBERALIZATION AND THE EXTENSIVE MARGIN

Identifieur interne : 005A49 ( Main/Exploration ); précédent : 005A48; suivant : 005A50

TRADE LIBERALIZATION AND THE EXTENSIVE MARGIN

Auteurs : Purba Mukerji

Source :

RBID : ISTEX:59B18A3C3221085D2AC8A2A3F01C575E29587178

Descripteurs français

English descriptors

Abstract

Trade barriers can lead to the disappearance of products and impose huge costs. Allowing for the realistic possibility that imported products are substituted by domestic varieties this paper finds that the cost of protection that allows for disappearance of products, the ‘Romer cost,’ is higher below a tariff threshold. This threshold depends on the substitutability of domestic for foreign products. This is important for developing countries where inferior technology leads to poor substitutability and traditional calculations underestimate the cost. Analysis of new varieties trade after the Indian liberalization supports the findings in the context of a developing country.

Url:
DOI: 10.1111/j.1467-9485.2009.00478.x


Affiliations:


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Le document en format XML

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<term>Cost differences</term>
<term>Cost structure</term>
<term>Deadweight</term>
<term>Deadweight loss</term>
<term>Different varieties</term>
<term>Distinct measures</term>
<term>Domestic economy</term>
<term>Domestic market</term>
<term>Domestic producer</term>
<term>Domestic producers</term>
<term>Domestic production</term>
<term>Domestic suppliers</term>
<term>Domestic varieties</term>
<term>Domestic variety</term>
<term>Elasticity</term>
<term>Entrant</term>
<term>Entrants output</term>
<term>Entry costs</term>
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<term>Equilibrium output</term>
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<term>Exporter</term>
<term>Extensive margin</term>
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<term>Foreign varieties</term>
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<term>Good entrants</term>
<term>High cost</term>
<term>Higher productivity</term>
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<term>Intensive margin</term>
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<term>International trade</term>
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<term>Marginal cost</term>
<term>Marginal exporter</term>
<term>Market size</term>
<term>Maximization problem</term>
<term>Optimal output</term>
<term>Parameter values</term>
<term>Partial equilibrium</term>
<term>Partial equilibrium analysis</term>
<term>Partial equilibrium scenario</term>
<term>Partial equilibrium setup</term>
<term>Percentage loss</term>
<term>Post monopoly revenue</term>
<term>Practical importance</term>
<term>Producer output</term>
<term>Realistic possibility</term>
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<term>Tariff protection</term>
<term>Tariff rate</term>
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<term>Tariff threshold</term>
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<term>Total cost</term>
<term>Total exports</term>
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<term>Total number</term>
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<term>Trade liberalization</term>
<term>Trade protection</term>
<term>Trade restrictions</term>
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<term>Traditional deadweight loss</term>
<term>Traditional deadweight loss calculations</term>
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<div type="abstract" xml:lang="en">Trade barriers can lead to the disappearance of products and impose huge costs. Allowing for the realistic possibility that imported products are substituted by domestic varieties this paper finds that the cost of protection that allows for disappearance of products, the ‘Romer cost,’ is higher below a tariff threshold. This threshold depends on the substitutability of domestic for foreign products. This is important for developing countries where inferior technology leads to poor substitutability and traditional calculations underestimate the cost. Analysis of new varieties trade after the Indian liberalization supports the findings in the context of a developing country.</div>
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