Rent Sharing In the Multi‐Fibre Arrangement: Theory and Evidence From Us Apparel Imports From Hong Kong*

Abstract

Available estimates of tariff equivalents and welfare costs of MFA quotas are based on the premise of perfect competition in both product and license markets, and the assumption that exporting countries receive all the scarcity rent. We test if US apparel imports from Hong Kong conform with this competitive model by looking at whether the license-price-inclusive Hong Kong price, adjusted for tariffs and transport costs, is equal to the US price. We deal with the homogeneous product case and correct for both aggregation and quality differences. We find that US importers seem to retain a substantial portion of the quota rents. 'We are grateful to the World Bank for research support. We would also like to thank Ronald Chan, Paula Holmes. Tom Prusa. and Yun-Wing Sung for providing us with data; Phillip Swage1 for helpful comments; and Monique Skruzny and Christopher Holmes for excellent research assistance. 0 Bawl Blrckwcll Lid 1993. IOR Cowlcy Road. Oxford OX4 IJF. U K m d 238 Mdin Strrci. CJmbndgc. .MA 02142. USA 336

The role of importers and exporters in the determination of the U.S. tariff preferences granted to Latin America

“…This share is much lower for exporters located in the poorest countries that are members of the AGOA. 26 Krishna, Erzan and Tan (1994) show a similar pattern in the tariff preferences granted by the U.S. to apparel goods originating in Hong Kong. 27 None of the Latin American economies correspond to more than 2% of world trade.…”

Estimating Trade Restrictiveness Indices

“…First, as estimated by Krishna et al (1994) US importers have market power when facing rest‐of‐the‐world exporters, and this leads to rent‐sharing. Krishna et al (1994) suggest that when taking this into account the restrictiveness of MFA quotas is 18 to 100% higher than suggested by ETE estimates. Thus, the trade restrictiveness of MFA quotas in the US is somewhere between 18 and 30% once we adjust ETE estimates for rent‐sharing.…”

AGOA and Apparel: Who Captures the Tariff Rent in the Presence of Preferential Market Access?

“…2 The literature has already provided evidence of imperfect competition among importers of apparel in the US. Krishna, Erzan and Tan (1994) provide evidence for US importers of apparel from Hong Kong. Krishna and Tan (1998) show this pattern to be common among other apparel exporters in Asia.…”