Book chapter
Pareto-Improving Trading Clubs without Income Transfers
Globalization and Emerging Issues in Trade Theory and Policy, Vol.5, pp.139-162
Frontiers of Economics and Globalization, v. 5, Emerald
2008
DOI: 10.1016/S1574-8715(08)05010-0
Abstract
Purpose - We ask how far the Kemp Wan Pareto-improving result can hold without inter-country transfers.
Methodology/approach - Assuming that the standard revenue and expenditure functions exist, we consider tariff adjustments for some group of countries such that they makes member countries better off without affecting non-member countries (a la Kemp Wan).
Findings - Any group of countries can engage in a Pareto-improving nondiscriminatory tariff reform without income transfers, if (i) there are more than two tradable goods and (ii) the initial tariff vectors of the member countries satisfy the non-proportionality condition. We then show that if these two conditions hold then countries can form a Pareto-optimal customs union. Depending on initial conditions, transfers may be necessary for the customs union to be Pareto-improving.
Originality/value of paper - The Pareto-improving result of this chapter is based on tariff reform only.
Details
- Title: Subtitle
- Pareto-Improving Trading Clubs without Income Transfers
- Creators
- Kazumichi Iwasa - Kobe UniversityRaymond Riezman - Univ Iowa, Iowa City, IA 52242 USAKoji Shimomura - Kobe University
- Contributors
- B TranNam (Editor)N VanLong (Editor)M Tawada (Editor)
- Resource Type
- Book chapter
- Publication Details
- Globalization and Emerging Issues in Trade Theory and Policy, Vol.5, pp.139-162
- Series
- Frontiers of Economics and Globalization; v. 5
- DOI
- 10.1016/S1574-8715(08)05010-0
- ISSN
- 1574-8715
- Publisher
- Emerald; Bingley
- Number of pages
- 24
- Language
- English
- Date published
- 2008
- Academic Unit
- Economics
- Record Identifier
- 9984963099102771
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