Reciprocity, world prices and welfare

Arbeitspapier

We examine in detail the circumstances under which reciprocity, as defined in Bagwell and Staiger (1999), leads to fixed world prices. We show that a change of tariffs satisfying reciprocity does not necessarily imply constant world prices in a world of many goods and countries. While it is possible to find tariff reforms that are consistent with both reciprocity and constant world prices, these reforms do not follow from the reciprocity condition, but rather from the requirement of unchanged world prices. We propose an alternative reciprocity rule that is guaranteed to raise the welfare of all countries, independently of whether world prices change and independently of the relative numbers of goods and countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3607

Classification and Topics

• Classification: Wirtschaft ; International Economic Order and Integration ; Trade Policy; International Trade Organizations ; Economic Integration
• Subject: GATT ; reciprocity ; fixed world prices

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Raimondos-Møller, Pascalis ; Woodland, Alan D.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/52500
• Last update: 10.03.2025, 11:41 AM CET