Effects of Quotas under Variable Returns to Scale: The Large Country Case

Chao, Chi‐Chur; Hwang, Hong Sang; Yu, Eden S. H.

doi:10.2307/1059731

Cited by 1 publication

(2 citation statements)

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“…He showed that, unlike the Brecher and Diaz-Alejandro (1977) proposition, under certain conditions, tariff-induced capital inflow improves the host country's welfare even if the foreign capital receives the full (untaxed) value of its marginal product. Chao et al (1990) showed that, under VRS, a tightening of import quotas reduces (or increases) welfare for a small country. They derived a formula for computing the optimal domestic price ratio under a quota.…”

Section: Trade Policies Economic Growth and Welfare Under Vrsmentioning

confidence: 99%

“…They derived a formula for computing the optimal domestic price ratio under a quota. Chao et al (1993) extended the analysis to a large-country case, and concluded that many of the conventional results on quotas may not hold in the presence of strong VRS. In particular, they derived the conditions under which a quota can benefit the exporting country, the importing country, or both countries, and the conditions under which a quota generates opposite effects on the price ratio and welfare relative to the initial effects when the quota is introduced.…”

Section: Trade Policies Economic Growth and Welfare Under Vrsmentioning

confidence: 99%

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External Economies in the International Trade Theory: A Survey

Choi

2002

Rev International Economics

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The paper surveys the international trade literature on intraindustrial and interindustrial production externalities. It places particular emphasis upon the literature on variable returns to scale (VRS) developed along the Kemp line that the externalities are output-generated, and the economies of scale are external (internal) to individual firms (industry). The discussion touches upon the literature examining the implications of VRS for fundamental trade theorems, trade policies, economic growth, and welfare. The paper extends the survey to writings on the Meade-type interindustrial production externalities.

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Section: Trade Policies Economic Growth and Welfare Under Vrsmentioning

confidence: 99%

Section: Trade Policies Economic Growth and Welfare Under Vrsmentioning

confidence: 99%