New Goods, Old Theory, and the Welfare Costs of Trade Restrictions

@article{Romer1993NewGO,
  title={New Goods, Old Theory, and the Welfare Costs of Trade Restrictions},
  author={Paul Romer},
  journal={NBER Working Paper Series},
  year={1993}
}
  • P. Romer
  • Published 1 September 1993
  • Economics
  • NBER Working Paper Series
The typical economic model implicitly assumes that the set of goods in an economy never changes. As a result, the predicted efficiency loss from a tariff is small, on the order of the square of the tariff rate. If we loosen this assumption and assume that international trade can bring new goods into an economy, the fraction of national income lost when a tariff is imposed can be much larger, as much as two times the tariff rate. Much of this paper is devoted to explaining why this seemingly… 
A New Foundation of Economic Theory and its Application to Trade Analysis
In the last two decades, a lot of models have been developed about the new trade theory. The work by Avinash Dixit and Joseph Stiglitz (1977) is often credited as the crucial innovation that made the
Investment in New Activities and the Welfare Cost of Uncertainty
Recent literature has highlighted the importance of new activities in development and growth. It was shown that trade distortions such as tariffs are associated with first-order costs stemming from
Investment in New Activities and the Welfare Cost of Uncertainty
Recent literature has highlighted the importance of new activities in development and growth. It was shown that trade distortions such as tariffs are associated with first-order costs stemming from
APPLYING NEW GROWTH THEORY TO INTERNATIONAL TRADE
Abstract This paper argues that the baseline assumptions in conventional trade theory may mislead many governments into belittling the role of trade in human development. The theory of comparative
The Number of Goods as a Welfare Variable: A Simplified Graphic Approach
Trade, the Internet, and product innovation have greatly enlarged the number of goods (N) in the consumer's choice set. The welfare effect of the growth in N has been extensively discussed in the
Intra-Industry Trade, Endogenous Technological Change, Wage Inequality And Welfare
By using two alternative intra-industry trade models (1. - New goods cannot be introduced into the economy; 2. - The possibility for a set of capital goods available in the economy to vary; both
Indra-Industry Trade, Endogenous Technical Change, Wage Inequality and Welfare
By using alternative intra-industry trade models (1. New goods cannot be introduced into the economy; 2. The possibility for a set of capital goods available in the economy to vary; the models
TRADE L I BERALIZATION A N D TH E E X TEN S I V E M ARG I N
Trade barriers can lead to the disappearance of products and impose huge costs. Allowing for the realistic possibility that imported products are substituted by domestic varieties this paper finds
Intra-Industry Trade, Endogenous Technological Change, Wage Inequality and Welfare
By using alternative intra-industry trade models (1. - New goods cannot be introduced into the economy; 2. - The possibility for a set of capital goods available in the economy to vary; the models
Appendix . Trade Reform and the Poor : A Simple Framework
ing from fiscal revenue considerations, barriers to trade are typically put in place to protect domestic producers from international competition, and usually benefit powerful interest groups, not
...
1
2
3
4
5
...

References

SHOWING 1-10 OF 45 REFERENCES
A Convex Model of Equilibrium Growth
Our aim in this paper is to exposit a convex model of equilibrium growth. The model is strictly in the Solow tradition. The model has two features which distinguish it from most other work on the
THE GENERAL WELFARE IN RELATION TO PROBLEMS OF TAXATION AND OF RAILWAY AND UTILITY RATES. IN: RAILWAYS
This classic paper defends the use of marginal cost pricing for railways. The author views his contributions as an extension of Dupuit's fundamental insights concerning the relation between the
Rethinking International Trade
Over the past decade, a small group of economists has challenged traditional wisdom about international trade. "Rethinking International Trade provides a coherent account of this research program and
INCREASING RETURNS AND ECONOMIC PROGRESS
AbstractMy subject may appear alarmingly formidable, but I did not intend it to be so. The words economic progress, taken by themselves, would suggest the pursuit of some philosophy of history, of
A Convex Model of Equilibrium Growth: Theory and Policy Implications
Our aim in this paper is to exposit a convex model of equilibrium growth. The model has two features that distinguish it from most other work on the subject: first, that the model is convex on the
How Costly is Protectionism
How costly is protectionism? This paper begins from a U.S. perspective, examining the costs to both the U.S. and other countries from U.S. protectionism. It emphasizes that substantial costs are
An evolutionary theory of economic change
This study develops an evolutionary theory of the capabilities and behavior of business firms operating in a market environment. It includes both general discussion and the manipulation of specific
Two Strategies for Economic Development: Using Ideas and Producing Ideas
The central claim of this paper is that the difference between the economics of ideas and the economics of objects is important for our understanding of growth and development. A subsidiary claim is
Endogenous Technological Change
Growth in this model is driven by technological change that arises from intentional investment decisions made by profit-maximizing agents. The distinguishing feature of the technology as an input is
Two-part marginal cost pricing equilibria: Existence and efficiency
Two-part tariffs are explored in a general equilibrium model with increasing returns to scale. Two-part marginal cost pricing equilibria are not generally Paretoefficient. The Second Fundamental
...
1
2
3
4
5
...