Rules of Origin as Commercial Policy Instruments

Article, Research, Preprint OPEN
Rod Falvey ; Geoff Reed (2002)
  • Publisher: Copenhagen: University of Copenhagen, Economic Policy Research Unit (EPRU)
  • Journal: International Economic Review (vol: 43, pp: 393-408)
  • Subject:
    • ddc: ddc:330

This article examines the role of rules of origin as a commercial policy instrument that targets the input composition of imports. Using a three-country, partial equilibrium structure, we demonstrate conditions under which the imposition of a binding rule will be welfare improving for an importer facing competitive export suppliers. We further show that employing rules of origin in this way would be complementary to, rather than a substitute for, conventional optimal tariffs. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
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