Protectionist responses and declining industries

This paper employs a three-factor Ricardo-Viner model of a small economy to analyse the effect of a falling world import price on the domestic price of the economy's importable good in the presence of an endogenously determined tariff. The outcome is seen to depend on (a) the way in which the r...

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Bibliographic Details
Published inJournal of international economics Vol. 30; no. 1; pp. 87 - 103
Main Authors Van Long, Ngo, Vousden, Neil
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.02.1991
Elsevier
North-Holland Publishing Co
Elsevier Sequoia S.A
SeriesJournal of International Economics
Subjects
Consumer goods
Economic models
Economic statistics
Economic theory
Economics
Effects
Imports
International trade
Market equilibrium
Prices
Protectionism
Risk aversion
Studies
Tariffs
Utility functions
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Summary:This paper employs a three-factor Ricardo-Viner model of a small economy to analyse the effect of a falling world import price on the domestic price of the economy's importable good in the presence of an endogenously determined tariff. The outcome is seen to depend on (a) the way in which the recycled tariff revenue is allocated to the three factor groups, and (b) differences in relative risk aversion across those groups. However, under reasonable assumptions, Hillman's (1982) result that ‘a declining industry will continue to decline’ is seen to hold in our general equilibrium framework.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0022-1996
1873-0353
DOI:10.1016/0022-1996(91)90006-R