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The gains from duty free zones
Giovanni Facchini - Gerald Willmann
eBook Edition: 1999

Duty free zones have been established in many countries and duty free shops can be found in every major international airport. This paper investigates their welfare effect, in the tradition of the Pareto gains from trade literature. Using the dual approach developed in Dixit and Norman (1980), we show that the introduction of a duty free zone leads to Pareto gains over autarky. Compared to free trade, its welfare impact depends on the redistribution mechanism accompanying free trade. We show that with a Dixit–Norman tax scheme free trade is Pareto-inferior to a duty free zone regime. (From Author)

eBook Contents

Abstract – Introduction - The formal framework - Pareto gains from duty free zones for a small country - Pareto ranking free trade and duty free zones - Concluding remarks – Acknowledgements - References

eBook License: Copyrighted (Personal Use Only)

Free PDF eBook - 75 Kb - 10 Pages