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Steepest Ascent Tariff Reforms

Author: Pascalis Raimondos-Møller; Alan D Woodland
Publisher: München : CESifo, Center for Economic Studies & Ifo Institute for economic research, 2006.
Series: CESifo working paper series, 1760.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Summary:
This paper introduces the concept of a steepest ascent tariff reform for a small open economy. By construction, it is locally optimal in that it yields the highest gain in utility of any feasible tariff reform vector of the same length. Accordingly, it provides a convenient benchmark for the evaluation of the welfare effectiveness of other well known tariff reform rules, as e.g. the proportional and the concertina  Read more...
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Details

Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Pascalis Raimondos-Møller; Alan D Woodland
OCLC Number: 429460685
Description: 1 online resource (Text.)
Series Title: CESifo working paper series, 1760.
Responsibility: Pascalis Raimondos-Møller, Alan D. Woodland.

Abstract:

This paper introduces the concept of a steepest ascent tariff reform for a small open economy. By construction, it is locally optimal in that it yields the highest gain in utility of any feasible tariff reform vector of the same length. Accordingly, it provides a convenient benchmark for the evaluation of the welfare effectiveness of other well known tariff reform rules, as e.g. the proportional and the concertina rules. We develop the properties of this tariff reform, characterize the sources of the potential welfare gains from tariff reform, use it to establish conditions under which some existing reforms are locally optimal, provide geometric illustrations and compare welfare effectiveness of reforms using numerical examples. Moreover, being a general concept, we apply it to the issue of market access and examine its implications. Overall, the paper's contribution lies in presenting a theoretical concept where the focus is upon the size of welfare gains accruing from tariff reforms rather than simply with the direction of welfare effects that has been the concern of the literature.

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