TY  - JOUR
AU  - Krishna,Kala
AU  - Tan,Ling H.
TI  - Trade Policy with Heterogeneous Traders: Do Quotas Get a Bum Rap?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13040
PY  - 2007
Y2  - April 2007
UR  - http://www.nber.org/papers/w13040
L1  - http://www.nber.org/papers/w13040.pdf
N1  - Author contact info:
Kala Krishna
Department of Economics
523 Kern Graduate Building
The Pennsylvania State University
University Park, PA 16802
Tel: 814/865-1106
Fax: 814/863-4775
E-Mail: kmk4@psu.edu

Ling H. Tan
700 19th Street, NW
Washington, DC 20431
E-Mail: ltan@imf.org
AB  - This paper considers the effects of trade policy--tariffs and quotas--when importing is done by competitive traders who are identical ex ante but differ ex post. We show that the standard equivalence results no longer hold and the conventional ranking of tariffs and quotas is turned on its head: quotas are not as bad for welfare as previously believed, while tariffs may restrict trade by more than originally intended. Furthermore, the allocation of property rights (quota licenses) has real effects beyond the distribution of rents; this, in turn, has implications for the effects of corruption on welfare.
ER  -