ON TARIFF PREFERENCES AND DELEGATION DECISIONS IN CUSTOMS UNIONS: A HECKSCHER-OHLIN APPROACH

This paper studies preferences of customs union (CU) members over common external tariff (CET) levels and extends the literature on delegation decisions over trade policy in models with production. In a model with similar CU members, we prove that most-preferred CETs can be ranked with the help of c...

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Bibliographic Details
Published inThe Economic journal (London) Vol. 112; no. 481; pp. 625 - 648
Main Author Syropoulos, Constantinos
Format Journal Article
LanguageEnglish
Published Oxford UK Blackwell Publishers 01.07.2002
Oxford University Press
Subjects
Customs unions
Decision making models
Demand curves
Economic theory
Economics
Endowments
GATT
Heckscher-Ohlin theorem
Preferences
Preferential tariffs
Price elasticity
Price elasticity of demand
Studies
Tariff preferences
Tariffs
Terms of trade
Trade
Trade agreements
Trade policy
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Summary:This paper studies preferences of customs union (CU) members over common external tariff (CET) levels and extends the literature on delegation decisions over trade policy in models with production. In a model with similar CU members, we prove that most-preferred CETs can be ranked with the help of compensated price elasticities of import demand functions. In the Heckscher-Ohlin trade model, we show these elasticities depend on inter-country differences in relative factor endowments and inter-sectoral differences in technology. This helps identify the optimal policy maker in a CU and demonstrates delegation decisions over trade policy can be integrated into mainstream trade theory.
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ArticleID:ECOJ733
ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
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ISSN:0013-0133
1468-0297
DOI:10.1111/1468-0297.00733