The costs and benefits of rules of origin / Emanuel Ornelas and John Turner
Contributor(s): Resource type: Ressourcentyp: Buch (Online)Book (Online)Language: English Series: Centre for Economic Policy Research. Discussion papers ; DP18789Publisher: London : Centre for Economic Policy Research, 29 January 2024Description: 1 Online-Ressource (circa 59 Seiten) : IllustrationenSubject(s): Genre/Form: Online resources: Summary: Rules of origin offer preferred market access for final goods whose inputs originate mostly within a free trade agreement. Governments often champion such rules for boosting investment. We use a property-rights framework to study when this motivation is justifiable. The rule does not bind for all supply chains, as some (very-high-productivity) suppliers comply in an unconstrained way and some (very-low-productivity) suppliers do not comply. For those suppliers it affects, the rule both increases investments and induces excessive sourcing within the trading bloc. From a social standpoint, the best rule binds for relatively high-productivity suppliers, because the marginal net welfare gain from tightening it increases with productivity. Therefore, when industry productivity is high, a $strict$ rule is socially desirable. In contrast, a lenient rule binds for relatively low-productivity suppliers and is more likely to be harmful. For output tariffs that are not too high, a sufficiently strict rule ensures welfare gains.PPN: PPN: 1880753863Package identifier: Produktsigel: ZDB-1-CEPPNo physical items for this record