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Title: |
Efficiency and Export Earnings Implications of
Two-Tier Quota Allocation Rules |
| Author: |
Bark, Taeho; De
Melo, Jaime |
| Author
Affiliation: |
Korea Devel
Instit; World Bank |
| Source: |
International Economic Journal, Autumn 1989, v. 3, no. 3, pp. 31-42 |
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Publication Date: |
Autumn 1989 |
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Abstract: |
Countries facing VERs often adopt a
two-tier allocation system for export licenses to the restricted market:
(1) a "basic" allocation based on export shares to the restricted
market: (2) and an "open" allocation based on export shares to the
nonrestricted market. This paper shows that this two-tier allocation
system which increases exports to the nonrestricted market beyond levels
with a single quota allocation system, has an efficiency cost as it
results in extra sales at below marginal cost. The paper also shows that
the recent history of VER negotiations provides a rationale for such a
policy. Finally, the paper suggests that the recent increase in
anti-dumping cases may be partly associated with the adoption of a
two-tier quota allocation systems. |
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