How barriers to international trade affect TFP

Berthold Herrendorf, Arilton Teixeira

Research output: Contribution to journalArticle

10 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 languageEnglish (US)
Pages (from-to)866-876
Number of pages11
JournalReview of Economic Dynamics
Volume8
Issue number4
DOIs
StatePublished - Oct 1 2005

Keywords

  • Monopoly rights
  • Quota
  • Tariff

ASJC Scopus subject areas

  • Economics and Econometrics

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