Working Paper: NBER ID: w3258
Authors: Robert C. Feenstra; Tracy R. Lewis; John McMillan
Abstract: 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.
Keywords: trade policy; import quotas; auction; information asymmetry
JEL Codes: F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| information completeness (L15) | policy effectiveness (D78) |
| limited information conditions (D89) | optimal design of trade policies (F13) |
| auction process (D44) | aggregation of bidders’ private information (D44) |
| competitive bidding dynamics (D44) | auction outcomes (D44) |
| auction design (D44) | revenue generation (H27) |