Adjustment costs and gradual trade liberalization

• 成果类型: Article
• 署名作者: Furusawa, T; Lai, ELC
• 署名单位: City University of Hong Kong; Yokohama National University; Vanderbilt University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(98)00071-3
• 发表日期: 1999
• 页码: 333-361
• 关键词: adjustment costs; trade liberalization; Trade adjustment assistance

摘要

This paper analyzes dynamic bilateral trade liberalization between two large countries. Trade liberalization causes the importable sector of each country to shrink and thereby causes reallocation of labor between sectors. Assuming that each moving worker must pay a fixed adjustment cost, a country has to bear a total adjustment cost which is linear in the amount of moving workers. We derive the most-cooperative, self-enforcing trade liberalization path, and find that in general trade liberalization is gradual. We also find that trade adjustment assistance that compensates workers for relocation out of the protected sector will accelerate the pace of trade liberalization. (C) 1999 Elsevier Science B.V. All rights reserved. JEL classification: F13 (International Trade); C73 (Dynamic Games).