NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Designing Policies to Open Trade

Robert C. Feenstra, Tracy R. Lewis, John McMillan

NBER Working Paper No. 3258
Issued in February 1990
NBER Program(s):   ITI   IFM

In this paper we consider recent proposals to auction U.S. import quotas. using the funds so obtained to encourage relocation out of the protected industries. We argue that the information available to the government, or lack thereof, is a critical factor in understanding these policies. In a world or full information, it makes little sense to use auction quotas rather than tariffs. Similarly, it is unclear why an elaborate program of temporary protection is needed, rather than immediately opening trade and compensating people with an income transfer. When the government has Limited information, however, these policies become quite sensible and may even be optimal.

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Document Object Identifier (DOI): 10.3386/w3258

Published: Economics and Politics, 2(3), November 1990, pp. 223-240

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