GEP Research Paper 99/17

A Model of Substitution of Non-Tariff Barriers

Zhihao Yu

This paper was subsequently published in the Canadian Journal of Economics , Vol. 33 (2000), pp. 1069-1090.

Abstract

This paper suggests some coherent explanations for tariff reductions and substitution of non-tariff barriers for tariffs, taking into account both organized special interests and unorganized consumer interests. It focuses on how the presence of informed consumers affects the political equilibrium choice of trade policy - both the level of protection and the policy instrument. The paper identifies three effects that interact with each other as an incumbent government substitutes a NTB for a tariff and finds, among other things, that an increase in foreign competition will not cause the government to substitute NTBs for tariffs but a rise in the government's valuation of political contribution might.

Issued in October 1999.

This paper is available in PDF format .