TY  - JOUR
AU  - Baldwin,Robert E.
TI  - Are Economists' Traditional Trade Policy Views Still Valid?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 3793
PY  - 1991
Y2  - July 1991
UR  - http://www.nber.org/papers/w3793
L1  - http://www.nber.org/papers/w3793.pdf
N1  - Author contact info:
Robert E. Baldwin
University of Wisconsin-Madison
Department of Economics
7321 Social Science Building
1180 Observatory Drive
Madison, WI  53706
Tel: 608/263-7397
Fax: 608/263-3876;608/233-8284
E-Mail: rebaldwi@facstaff.wisc.edu
AB  - Recent analysis of trade policies under imperfectly competitive market conditions as well as in situations where trade in high-technology products is important have raised doubts whether economists should continue their traditional opposition to trade taxes and subsidies. This paper evaluates the new theoretical arguments for interventionist trade policies by comparing them with the traditional arguments for and against free trade, investigating the empirical evidence supporting the conditions assumed in the new models, appraising the realism of the behavior assumptions of these models and the sensitivity of their conclusions to changes in these assumptions, and considering the political economy implications of these conclusions. The general conclusion is that there are serious practical difficulties with the interventionist arguments of the 'new' trade theorists, as they themselves recognize, just as there are with such traditional arguments for trade intervention as the terms-of-trade case for protection. However, the new industrial organization approach to trade theory has already provided valuable insights into trade behavior in international markets and promises to provide many more as more realistic behavior models are developed.
ER  -