Steepest Ascent Tariff Reform

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

Resumé

The policy reform literature is primarily concerned with the construction of reforms that yield welfare gains. By contrast, this paper’s contribution is to develop a theoretical concept for which the focus is upon the sizes of welfare gains accruing from policy reforms rather than upon their signs. In undertaking this task, and by focusing on tariff reforms, we introduce the concept of a steepest ascent policy reform, which is a locally optimal reform in the sense that it achieves the highest marginal gain in utility of any feasible local reform. We argue that this reform presents itself as a natural benchmark for the evaluation of the welfare effectiveness of other popular tariff reforms such as the proportional tariff reduction and the concertina rules, since it provides the maximal welfare gain of all possible local reforms. We derive properties of the steepest ascent tariff reform, construct an index to measure the relative welfare effectiveness of any given tariff reform, determine conditions under which proportional and concertina reforms are locally optimal and provide illustrative examples.
OriginalsprogEngelsk
TidsskriftEconomic Theory
Vol/bind55
Udgave nummer1
Sider (fra-til)69-99
Antal sider32
ISSN0938-2259
DOI
StatusUdgivet - jan. 2014

Emneord

  • Piecemeal tariff policy
  • Locally optimal reforms

Citer dette

Raimondos-Møller, Pascalis ; Woodland, Alan. / Steepest Ascent Tariff Reform. I: Economic Theory. 2014 ; Bind 55, Nr. 1. s. 69-99.
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Steepest Ascent Tariff Reform. / Raimondos-Møller, Pascalis; Woodland, Alan.

I: Economic Theory, Bind 55, Nr. 1, 01.2014, s. 69-99.

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

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