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Full-Text Articles in International Economics
The Outlook For U.S. – China Textile And Apparel Trade In 2009: From The Trade Policy Perspective, Sheng Lu
The Outlook For U.S. – China Textile And Apparel Trade In 2009: From The Trade Policy Perspective, Sheng Lu
Sheng Lu
Despite the low ebb in trade volume, the year 2009 could be a golden opportunity for the textile and apparel industry both in the United States and China to reform and change. The U.S. textile industry at present urgently needs to figure out some new business models and explore more overseas markets to meet the challenges of lessening domestic demand. On the other hand, the task for the Chinese is to further reduce reliance on exports while absorbing the production capacity of the industry by stimulating more domestic consumption. With the economic interests between the U.S. and Chinese textile and …
On The Political Substitutability Between Tariffs And Subsidies, Daniel Brou, Michele Ruta
On The Political Substitutability Between Tariffs And Subsidies, Daniel Brou, Michele Ruta
Daniel Brou
This paper provides a simple model that highlights the political substitutability between import tariffs and production subsidies.1 When taxes are distortionary, political pressures by domestic interest groups representing the import competing sector induce the government to set inefficiently high tariffs and subsidies. If the government commits the tariff to a lower level - for instance by signing a binding commitment in a trade agreement - interest groups demand (and in the political equilibrium obtain) a larger production subsidy. This political substitutability between tariffs and subsidies is shown to reduce social welfare.