Positive welfare effects of trade barriers in a dynamic equilibrium model

Arbeitspapier

We develop a simple two-region, cobweb-type dynamic equilibrium model to demonstrate the existence of optimal trade barriers. A pure comparative statics analysis of our model suggests that a reduction of trade barriers always enhances welfare. However, taking a dynamic perspective reveals that nonlinear trade interactions between the two regions may generate endogenous price fluctuations which can hamper both consumer and producer surplus. Finally, we allow special interest groups, such as consumers or producers from the two regions, to lobby for a particular level of trade barriers. Our model predicts that time-varying trade barriers may be another channel for market instability.

Object Details

• ISBN: 978-3-943153-06-4
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BERG Working Paper Series ; No. 91

Classification and Topics

• Classification: Wirtschaft ; Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior ; Trade Policy; International Trade Organizations ; Taxation and Subsidies: Efficiency; Optimal Taxation
• Subject: cobweb dynamics ; market interactions ; optimal import tariffs ; welfare analysis ; political economy of trade barriers

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tuinstra, Jan ; Wegener, Michael ; Westerhoff, Frank
• Event: Veröffentlichung
• (who): Bamberg University, Bamberg Economic Research Group (BERG)
• (where): Bamberg
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/88116
• Last update: 10.03.2025, 11:45 AM CET