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Title: |
A Partial Equilibrium Analysis of Trade with
Decreasing Transport Costs |
| Author: |
Alam, M. S. |
| Author
Affiliation: |
Northeastern U |
| Source: |
International Economic Journal, Winter 1991, v. 5, no. 4, pp. 63-69 |
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Publication Date: |
Winter 1991 |
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Abstract: |
Decreasing transport costs are
incorporated into the standard partial equilibrium analysis of trade by
allowing the divergence--introduced by transport costs--between export
and import price to decrease with the volume of trade. When the excess
demand (supply) curve is steeper than the long run average cost curve
for imports (exports), the author observes that an import (export)
tariff raises (lowers) the domestic price by an amount exceeding the
tariff. Further, when the excess demand (supply) curve is less steep
than the long run average cost curve for imports (exports), the
possibility exists that an import (export) tariff may lower (raise) the
domestic price. These results lead to the important conclusion that
tariffs cannot be used as measures of nominal protection across
industries. |
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