Publication Type
Journal Article
Version
publishedVersion
Publication Date
3-1970
Abstract
This article examines the implications for effective protection(EP) theory of allowing variable factor proportions and general equilibrium repercussions. The first claim of EP theory, is that it provides a measure of the maximum proportionate increase in factor rewards permitted by a tariff structure, as compared to a free trade regime. EP rates predict only a particular direction of resource flows whereas general equilibrium analysis, with variable input coefficients, indicates that flows contrary to EP prediction are possible. Two examples are provided, first, where there is a uniform tariff on final goods; and second, where one final sector has a higher nominal tariff than the other and there is no tariff on material imports. EP rates depend not only on nominal tariffs but also on value-added.
Discipline
Economics | Economic Theory | International Economics
Research Areas
International Economics
Publication
American Economic Review
Volume
60
Issue
1
First Page
107
Last Page
116
ISSN
0002-8282
Publisher
American Economic Association
Citation
TAN, Augustine H. H..
Differential Tariffs, Negative Value-Added and the Theory of Effective Protection. (1970). American Economic Review. 60, (1), 107-116.
Available at: https://ink.library.smu.edu.sg/soe_research/4
Copyright Owner and License
Publisher
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://www.jstor.org/stable/1807858