Trade Policy, Implementation, and Outcomes

9320825 Krishna This research will develop theoretical models of trade in an effort to understand the different effects of trade policy, especially when markets are imperfectly competitive. Most often the effects of policy depend on paying particular attention to the details of the implementation procedure. This study focuses on three main areas where the details of implementation are clearly important. The first is an investigation of export quotas, in an effort to ascertain whether transferability of licenses is welfare enhancing. The conventional wisdom is that transferable quotas are preferable to nontransferable ones. A simple model is developed to show that contrary to conventional wisdom, license prices could increase or decrease depending on the quota level and the extent of free quota. The second part of the study deals with issues of market access. There has recently been increasing pressure to create rules to ensure market access. The effort here is to find out if attempts to assure a minimum market share for U.S. products help or hurt its competitiveness in the long-run. Finally, the study conducts an analysis of the rules of origin used in Free Trade Agreements. These rules of origin are used to determine whether a good is produced in a Free Trade Area and hence eligible for preferential treatment of the Free Trade Area or not. This project is of significant interest because it allows a better understanding of the implications of different implementation procedures. The findings from the study are also important in more general settings as well. For example, the issue of the effects of permitting transferability is relevant for all types of permits from pollution permits to permits to run a taxicab. ***