How barriers to international trade affect TFP

Berthold Herrendorf; Arilton Teixeira

doi:10.1016/j.red.2005.04.001

How barriers to international trade affect TFP

Berthold Herrendorf, Arilton Teixeira

Economics

Research output: Contribution to journal › Article › peer-review

12 Scopus citations

Abstract

We ask how barriers to international trade affect TFP when there are monopoly rights in the import-competing industries. Holmes and Schmitz [1995. Resistance to new technology and trade between areas. Federal Reserve Bank of Minneapolis Quarterly Review 19, 2-17] show that without barriers to trade TFP in these industries is as large as possible. We study the general case of finite barriers to trade. We find that binding quotas lead to the use of inefficient technology in the import-competing industries. In addition, finite quotas or tariffs imply that the import-competing industries produce larger than efficient quantities, if they produce at all. For both of these reasons, barriers to international trade reduce TFP.

Original language	English (US)
Pages (from-to)	866-876
Number of pages	11
Journal	Review of Economic Dynamics
Volume	8
Issue number	4
DOIs	https://doi.org/10.1016/j.red.2005.04.001
State	Published - Oct 2005

Keywords

Monopoly rights
Quota
Tariff

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.red.2005.04.001

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title = "How barriers to international trade affect TFP",

abstract = "We ask how barriers to international trade affect TFP when there are monopoly rights in the import-competing industries. Holmes and Schmitz [1995. Resistance to new technology and trade between areas. Federal Reserve Bank of Minneapolis Quarterly Review 19, 2-17] show that without barriers to trade TFP in these industries is as large as possible. We study the general case of finite barriers to trade. We find that binding quotas lead to the use of inefficient technology in the import-competing industries. In addition, finite quotas or tariffs imply that the import-competing industries produce larger than efficient quantities, if they produce at all. For both of these reasons, barriers to international trade reduce TFP.",

keywords = "Monopoly rights, Quota, Tariff",

author = "Berthold Herrendorf and Arilton Teixeira",

note = "Funding Information: ✩ A previous version of this paper was entitled “How Trade Policy Affects Technology Adoption and Productivity.” This paper draws on a chapter of A. Teixeira{\textquoteright}s PhD dissertation [1999. Effects of trade policy on technology adoption. University of Minnesota]. B. Herrendorf acknowledges research funding from the Spanish Direcci{\'o}n General de Investigaci{\'o}n (Grant BEC2000-0170), from the European Union (Project 721, “New Approaches in the Study of Economic Fluctuations”), and from the Instituto Flores Lemus. * Corresponding author. E-mail addresses: berthold.herrendorf@asu.edu (B. Herrendorf), arilton@fucape.br (A. Teixeira).",

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AU - Teixeira, Arilton

N1 - Funding Information: ✩ A previous version of this paper was entitled “How Trade Policy Affects Technology Adoption and Productivity.” This paper draws on a chapter of A. Teixeira’s PhD dissertation [1999. Effects of trade policy on technology adoption. University of Minnesota]. B. Herrendorf acknowledges research funding from the Spanish Dirección General de Investigación (Grant BEC2000-0170), from the European Union (Project 721, “New Approaches in the Study of Economic Fluctuations”), and from the Instituto Flores Lemus. * Corresponding author. E-mail addresses: berthold.herrendorf@asu.edu (B. Herrendorf), arilton@fucape.br (A. Teixeira).

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N2 - We ask how barriers to international trade affect TFP when there are monopoly rights in the import-competing industries. Holmes and Schmitz [1995. Resistance to new technology and trade between areas. Federal Reserve Bank of Minneapolis Quarterly Review 19, 2-17] show that without barriers to trade TFP in these industries is as large as possible. We study the general case of finite barriers to trade. We find that binding quotas lead to the use of inefficient technology in the import-competing industries. In addition, finite quotas or tariffs imply that the import-competing industries produce larger than efficient quantities, if they produce at all. For both of these reasons, barriers to international trade reduce TFP.

AB - We ask how barriers to international trade affect TFP when there are monopoly rights in the import-competing industries. Holmes and Schmitz [1995. Resistance to new technology and trade between areas. Federal Reserve Bank of Minneapolis Quarterly Review 19, 2-17] show that without barriers to trade TFP in these industries is as large as possible. We study the general case of finite barriers to trade. We find that binding quotas lead to the use of inefficient technology in the import-competing industries. In addition, finite quotas or tariffs imply that the import-competing industries produce larger than efficient quantities, if they produce at all. For both of these reasons, barriers to international trade reduce TFP.

KW - Monopoly rights

KW - Quota

KW - Tariff

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How barriers to international trade affect TFP

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Keywords

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