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Welfare Effects of Tariff Reduction Formulas

Welfare Effects of Tariff Reduction Formulas

This paper examines the welfare effects of using different tariff reduction formulas proposed in various GATT/WTO negotiation rounds for achieving liberalization of trade barriers and improvements in market access. We em- ploy a simple symmetric two-country general equilibrium model with intra- industry trade and use numerical simulations to establish welfare results. We introduce firm-level heterogeneous fixed costs of exporting, so that in this model, not all firms trade in equilibrium; entry, exit and scale decisions of exporting firms are determined endogenously and depend on the tariff conversion formula used. Furthermore, we introduce a tariff structure (e.g. tariff peaks) to allow for high and low tariffs on products. We analyze the welfare effects of applying three different conversion formulas to obtain the same average tariff cut. The formulas are the proportional cut formula used in the Kennedy Round; the Swiss formula, which was accepted in the Tokyo Round; and the EU compression mechanism, which was proposed by the EU in the Doha Round.
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Coordinating Tariff Reduction and Domestic Tax Reform under Imperfect Competition

Coordinating Tariff Reduction and Domestic Tax Reform under Imperfect Competition

Despite the many practical examples pointing to its importance, the theoretical literature has paid little attention to the interaction between trade reform and domestic tax reform. A number of authors (e.g., Michael et al. (1993); Falvey (1994); Hatzipanayotou et al. (1994); and Tsuneki (1995)) have examined the welfare and revenue effects of integrated tax-tariff reforms for small, competitive economies. In that same context, Keen and Ligthart (2002) show that a simple strategy of coordinated tax-tariff reform in which reductions in tariffs are exactly offset by increases in consumption taxes—so leaving consumer prices unchanged— has extremely attractive properties: it unambiguously improves domestic welfare and raises government revenue. 2 They also show, however, that increasingly stringent conditions are
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Tariff Reduction, Fiscal Adjustment and Poverty in Pakistan: a CGE-Based Analysis

Tariff Reduction, Fiscal Adjustment and Poverty in Pakistan: a CGE-Based Analysis

Tariff revenue had always been the major source of government revenue until trade liberalization was initiated in the 1980s. To compensate for the loss in government revenue, GOP made changes in its tax structure. A general sales tax was imposed on domestic production as well as on imports. Such policy changes affect different socio-economic groups directly and indirectly through changes in prices and real income, and hence welfare and poverty. This paper simulates the effects of trade liberalization on welfare and poverty in the presence of alternative fiscal compensatory policies. Analysis of welfare and poverty consequences of policy changes is very important for a country like Pakistan where one-third of the population still lives below the poverty line (Siddiqui and Iqbal, 2001).
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Welfare vs. Market Access: The Implications of Tariff Structure for Tariff Reform

Welfare vs. Market Access: The Implications of Tariff Structure for Tariff Reform

a uniform absolute reduction in T, the tariff rates measured with respect to domestic prices. This is not the same as a uniform absolute reduction in τ, the tariff rates measured with respect to world prices. Moreover, the latter change is not guaranteed to raise welfare under reasonable conditions. The effects of this change are shown in the third row of Table 1. It reduces domestic prices in proportion to world prices (d π = −π * d α), and so corresponds to a movement away from A in Figure 1 along the dotted line AC which is parallel to OF. This lowers the generalised mean tariff provided T is less than one (which from Proposition 1 is ensured if all tariff-constrained goods are substitutes for the numeraire). However, it raises the generalised variance. The net effect on welfare is proportional to T−T ′ST, or (ι−T)′ST, which cannot be unambiguously signed even when all goods are substitutes. Hence this type of tariff reform is not helpful from a welfare perspective, though we will see in Section 4 that it is very important from the perspective of import volume.
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The Effect of the Uruguay Round Multilateral Tariff Reduction on the Intensive and Extensive Margins of Trade

The Effect of the Uruguay Round Multilateral Tariff Reduction on the Intensive and Extensive Margins of Trade

Table 7 also reports, for each margin, the share of the French export growth at current prices which can be attributed to tariff changes. According to our estimations, tariffs are a key variable, as they contribute to a range between 3.4% and 4.7% of the total French export growth between 1993 and 2002. Interestingly, when we split the effect into both margins, we find that tariffs have a much larger impact on average sales per firm, explaining between 12% and 13.3 % of the intensive margin growth. Our results suggest that tariffs affect only slightly the number of new exporters. Since some studies find virtuous effects of being an exporter on firm performance, this issue deserves further research in order to assess the reason why the number of exporters reacts so slightly to the significant reductions of worldwide tariffs, and whether this result is specific to France. If more firms could belong to the group of “superstars” and more varieties could be consumed all over the world, the welfare of countries could be positively affected.
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Welfare versus Market Access - The Implications of Tariff Structure for Tariff Reform

Welfare versus Market Access - The Implications of Tariff Structure for Tariff Reform

Computation can in principle provide answers to these questions. But computations of the effects of multiple tariff changes from any applied general equilibrium model will always be suspect because of uncertainty about the parameters and specification of the true' model of the economy. The theory of trade policy reform is a promising alternative which seeks to specify directions of change which can raise welfare or improve market access under plausibly general conditions. Unfortunately, however, progress in this research program has been relatively limited thus far (See Bruno, 1972; Foster and Sonnenschein, 1970; Hatta, 1977; Diewert, Turunen-Red and Woodland, 1989). There are but two results, the uniform radial reduction result (reduce all tariffs by the same proportion) and the "concertina rule" (reduce the highest tariff rate). Each
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Assessing Welfare Effects of the European

Assessing Welfare Effects of the European

The policy here used for the empirical assessment of welfare effects is the choice of hospital reform in the English National Health Service (NHS), introduced in 2006. The policy was introduced as part of the wave of market-based reforms to the NHS enacted by the Labour party from 2003 to 2008. The reforms focused on increasing patient choice and hospital competition and were accompanied by significant institutional changes to support a market for hospital care for NHS-funded patients. The purpose of the reforms was to improve quality whilst containing costs and to provide equitable care to all. On January 1, 2006, every patient in England became eligible to choose their secondary care 3 provider as well as where they receive surgical care. Along with giving patients a formal choice of where they could receive secondary care, the government also introduced a new information system, known as ‘Choose and Book’, which enabled paperless referrals and appointment bookings and which provided information on quality to help patients make more informed choices (Department of Health 2009). The booking interface gives the person booking the appointment the ability to search for hospitals based on geographic distance. It
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The Welfare Effects of Ticket Resale

The Welfare Effects of Ticket Resale

In this paper we present a new model of ticket resale, and we estimate its structural param- eters using a unique dataset that merges transaction-level information from both the primary and secondary ticket markets for a sample of rock concerts. The model is designed to provide a comprehensive analysis of the welfare effects of reselling, including the efficiency gains from ticket reallocation, as well as changes in transactions costs incurred in the primary and sec- ondary markets. There are three sequential stages of decision-making that we explicitly model. First, consumers make strategic choices of how much costly effort to exert in an arrival game that determines the sequence of buyers in the primary market. Second, individuals make choices about whether to buy in the primary market or to wait for the resale market. Third, purchased tickets are offered in the resale market to the endogenous pool of potential buyers that did not purchase in the primary market.
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The Welfare Effects of the Byrd Amendment

The Welfare Effects of the Byrd Amendment

However, their interests towards the size of the AD duty differ with the Byrd Amendment in place. The most illustrative example would be that of a prohibitive AD duty that perfectly shields the American producers against foreign competitors. Nevertheless, a prohibitive duty would completely eliminate the tariff revenues disbursed to them as part of the Byrd Amendment provisions. Therefore, in the presence of the Byrd Amendment, the American firms might have no incentive to petition for a complete halt in imports as it would subsequently terminate the distribution of any tariff revenues. On the other hand, American exporters are hurt by being charged the AD retaliation tariff in their export markets. In consequence, the gains accruing to the American import-competing industries might be totally offset by losses incurred by the American exporting industries. The US consumers are negatively affected by the AD tariff since the price of the AD targeted imported goods is higher in the US market. But the effects of the Byrd Amendment on the consumer surplus depend on how the amendment changes the domestic price and output levels in favor or against domestic consumers. Although the issue is relatively new, a strand of economic literature has already looked into this matter from both a theoretical as well as an empirical perspective. In a theoretical paper, Collie and Vandenbussche (2006) show that the Amendment can yield lower tariffs and higher welfare than in its absence, as long as the profits’ weight in the welfare function is large enough. They do not incorporate, however, any retaliation aspect related to the Byrd Amendment.
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Welfare effects of financial integration

Welfare effects of financial integration

An internalization of these negative externalities can be achieved partially by an unse- cured interbank market. In an unsecured interbank market the fear to trigger contagion that eventually hurts oneself limits banks’ incentives to free-ride on the liquidity provision of the interbank market. The full internalization of the negative externalities can only be achieved by the cross-border penetration of retail markets, which might however be a risk-sharing mechanism that involves more real costs. Thus, for sufficiently small financial systems the optimal means of integration may be an interbank market with secured lend- ing. At an intermediate level an unsecured interbank market may provide the efficient outcome and beyond a certain size of the financial system the cross-border penetration of retail markets is preferable. Therefore, from a policy perspective, our analysis high- lights the great importance of integrating retail financial services in large economic areas. Given how difficult it is to provide retail financial services at long distances, probably the most realistic way to achieve this is through cross-border or cross-regional bank mergers. Another important policy conclusion from the analysis is that the emergence of some con- tagion risk through certain forms of financial integration should not necessarily be taken as an argument against integration. In fact, the net welfare effects of better risk sharing and incentives may well be greater than the costs of contagion.
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International Outsourcing and Welfare Reduction: an Entry-deterrence Story

International Outsourcing and Welfare Reduction: an Entry-deterrence Story

Outsourcing of productions from the USA to countries such as India, Brazil and China, has emerged as a popular topic of discussion both in the academia and the media. The impacts of outsourcing on employment and quality have been at the center of debate. There have been great concerns that large number of job losses in the developed countries might occur as a result of international outsourcing of the unskilled and semi-skilled activities, although recent studies have shown that, instead of outsourcing, recent job losses in the USA are primarily due to the rise in the manufacturing productivity (Schultze, 2004) and the structural transformation of the economy (Groshen and Potter, 2003). Even though negative employment effect need not be in place, there are growing concerns about the effects on product quality of outsourcing. For example, a recent survey by Manpower in the UK indicates that 56 percent of IT specialist reports lower quality of IT works under international outsourcing than it is under in-house production, and that 11 percent reports that outsourcing sets back the firm’s production (see, http://www.manpower.co.uk/news/OutsourcingSurvey.pdf).
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The Welfare Effects of Environmental Taxation

The Welfare Effects of Environmental Taxation

energy costs remain essentially the same due to the higher cost of the technology but zero external costs. The other assumptions of our benchmark model hold. Revenues from environmental taxes falls to zero, however, leaving public goods provision unfinanced. To finance public expenditures, distortionary taxes are introduced but, because of their increased cost, a lower level of public goods is provided. Leaving aside the environmental improvements, welfare is reduced in this new scenario A compared to scenario B due to the provision of fewer public goods and due to the distortionary effects of taxation. Comparing the two scenarios we clearly have a situation where the ability to tax an externality was complementary to the provision of public goods; it did not compete with other public goods, but made it cheaper to provide more of them. 15 Indeed, Metcalf (2003) has shown that in a second-best setting the optimal level of environmental quality will likely be higher than in a first-best setting. The current thought experiment simply draws attention to the symmetrical complementarity from the side of public goods provision.
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The Welfare Effects of Social Mobility

The Welfare Effects of Social Mobility

providing social mobility that may reflect equal opportunities, which is beneficial to SWB, is not a question of a country‟s financial resources. According to Table 2, an increase in social mobility in terms of intergenerational wage elasticity by 0.1 increases the share of happiest persons in society by 6 percentage points. Similarly, an increase in educational attainment independence by 10 test score points equally increases the happy population share by 6.6 percentage points. The regressions for social trust yields the coefficients for mobility in education unchanged. In contrast, the coefficient on social mobility in terms of intergenerational earnings elasticity, which is only available for 12 countries, appears reduced in size, but stays jointly significant. Thus, the SWB effects of mobility in the labor market are partly mediated by social trust, which is not the case for educational mobility. Possibly, actual earnings are more decisive determinants of one‟s socio -economic positions in society than is education. Nevertheless, both mobility measures stay influential.
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The Welfare Effects of Monopoly Innovation

The Welfare Effects of Monopoly Innovation

Some literatures look at labor-managed behavior of a monopolist in a partial equilibrium setting. According to Hill and Waterson (1983), labor-managed industry equilibrium produced less output hence less welfare, than its profit-maximizing counterpart if firms were symmetric. Neary (1984, 1985) showed than small levels of output could lead to an increased number of firms in labor-managed equilibrium if firms were asymmetric in relation to technology and/or demand. Using a general equilibrium model, Neary (1992) showed that under certain circumstances, the equilibrium of the labor-managed economy could include more firms and result in higher welfare than the profit-maximizing one. If profits were positive, the labor-managed firms would not provide full employment. The entry of new firm can lower the unemployment and the wage rate, leading to lower total utility but a higher utility from consumption could lead to a higher total utility.
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Monopoly Innovation and Welfare Effects

Monopoly Innovation and Welfare Effects

However, this partial equilibrium analysis is not precise because the innovation carried out by one industry may change the resource allocation across the whole economy. In other words, more resources will be used by the innovating industry for production, leaving less for the other industries. Therefore in this economy some goods are produced in greater amounts than before the innovation, but some other goods are produced in smaller amounts than before the innovation. After the innovation, consumers consume greater amounts of some goods but smaller amounts of the others. Thus the total welfare effect is unclear. That explains why some other economists attempt to argue that monopoly innovation may lead to negative welfare effects. According to their belief, when more resources are used by the monopoly, it will significantly increase the deadweight loss. At the same time, the outputs produced by the other industries can also be significantly reduced. In terms of social welfare, this may not be compensated sufficiently by the increase in the monopoly outputs, and will eventually lead to a reduction of consumer utility.
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Heterogeneous Productivity Response to Tariff Reduction: Evidence from Brazilian Manufacturing Firms

Heterogeneous Productivity Response to Tariff Reduction: Evidence from Brazilian Manufacturing Firms

This paper studies the effects of trade liberalization on the evolution of firm productivity. The productivity of each firm was estimated using an unbalanced panel data of 4,484 Brazilian manufacturing firms from 1986 to 1998, following the procedure first proposed by Olley and Pakes (1996) and further developed by Levinsohn and Petrin (2003). First, the effect of nominal tariffs on firms' productivity levels is identified. After controlling for the endogeneity of nominal tariffs, the estimated coefficient for tariffs in the productivity equation turns out to be negative. Second, a measure of tariffs on inputs is added in the productivity equation. The coefficient associated with tariffs on inputs is also negative, and the inclusion of this new variable reduces the size of the estimated coefficient of nominal tariffs. Thus, it seems that, along with the increased competition, the new access to inputs that embody better foreign technology also contributes to productivity gains after trade liberalization. Third, it is shown that there is a huge degree of heterogeneity of responses to trade liberalization. The effect of the tariff reductions depends heavily on observed and unobserved characteristics of the firm.
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On the Macroeconomic and Welfare Effects of Illegal Immigration

On the Macroeconomic and Welfare Effects of Illegal Immigration

with more illegal immigrants in search, domestic workers …nd the opportunity cost of searching for jobs becomes higher so that it’s optimal to withdraw from supplying labor and to enjoy leisure instead. 23 This result turns out to be consistent with the existing empirical evidence. Borjas et al. (2007) report that a 10-percent immigrant-induced increase in the supply of a particular skill group is associated with a reduction in the black employment rate of 3:5 percentage points, and a 1:6 percentage point reduction in the employment rate of white men.

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Two Formulas for Success in Social Media: Social Learning and Network Effects

Two Formulas for Success in Social Media: Social Learning and Network Effects

In this study, we differentiate between social learning and network effects for social media content consumption, especially in the context of YouTube, the largest online video sharing website. Selecting online videos to watch is one of the most common choices viewers make every day. According to ComScore, the average user spend about 43 minutes watching online videos in June 2013, and Google websites (primarily YouTube) account for approximately 40% of that time, about 17 minutes. 1 According to YouTube statistics, 100 hours of video are uploaded to YouTube every minute. What these numbers mean is that, given the vast reservoir of online videos, choosing videos to watch can become a complicated issue. On the one hand, consumers receive various information from friends and infer video quality through social learning. On the other hand, frequent social sharing creates direct or indirect network effects where a video becomes a fad. For example, when a video goes viral, users have strong incentives to watch it so they have something to discuss in social encounters.
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The Impact of Agro - Tourism on Poverty Reduction and Welfare in the Region of Korça

The Impact of Agro - Tourism on Poverty Reduction and Welfare in the Region of Korça

As one of the most important sectors of economic development in Albania, the tourism sector accounts for 8.4% of GDP, while including indirect multiplier effects, its contribution is about 26% of GDP in 2016 and it is expected that in 2017 it will reach a direct contribution of over 9% and an indirect contribution of 27.4%, making this sector one of the key components of the national economy and foreign trade.

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Bowen_Chpt_7_Chemical Formulas

Bowen_Chpt_7_Chemical Formulas

1.Write the formulas and name for the binary ionic compounds formed between the following elements:a. Name the binary compound indicate by the following formulas:.[r]

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