Protection and the Shadow Price of Foreign Exchange with Increasing Returns and International Capital Mobility

Abstract

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.Abstract. In an economy with an external increasing returns technology and a convex production set, international capital mobility reduces the shadow price of foreign exchange if quotas or VERs are in force, but leaves this shadow price unaltered if tariffs are in place. Protection et prix de reference des devises etrangeres quand il y rendements croissants et mobilite internationale du capital. Dans une economie dot6e d'une technologie a rendements croissants et d'un ensemble de production convexe, la mobilit6 internationale du capital r6duit le prix de ref6rence des devises 6trangeres quand on a des contingentements ou des restrictions volontaires a 1'exportation, mais laisse le prix de r6f6rence inchange quand on a des droits de douane.We are indebted to two anonymous referees for many helpful comments.

World Increasing Returns and Production Subsidies

“…We also explicitly assume that one good produced under constant returns is selected as numeraire. 4 Using the GDP function approach for an increasing-returns-to-scale technology as developed by Helpman (1984), and recently used in Chandra and Naqvi (1997), the international trade equilibrium is characterized by the world market equilibrium condition and the requirement that aggregate expenditure equals income in each country:…”

Tariff and Quota Reform with International Capital Mobility

“…The tariff-revenue and quota-rents are t:rn l and t; m2' respectively. The tariff revenue accrues to the home government and is assumed to be rebated as a , Examples of variations in the standard small open economy model are found in Chandra and Naqvi (1997). Hatzipanayotou and Michael (1995).…”