Reforming Tariffs and Subsidies in International Trade

In: Pacific economic review, Band 7, Heft 2, S. 305-318

Abstract

This paper analyzes unilateral and multilateral reform of ad valorem tariffs and subsidies. The paper shows that under substitutability, extensive subsidization of exports is required for an increase in the lowest tariff rate to raise economic welfare. The paper derives also conditions for when a radial reduction of ad valorem tariffs and subsidies may fail to raise economic welfare.