This paper investigates whether a small country facing foreign price instability benefits from active stabilization of the domestic price of the importable. For example, the European Community can be treated as a small open economy facing price instability of agricultural products originating in...

This paper analyzes the incidence of agricultural commodity programs. Producers advocate commodity programs and receive price subsidies, but free entry and perfectly elastic supplies of nonland inputs ensure that landowners extract the entire surplus from price subsidies. Moreover, an increase...

In contrast to some trade theorists' long-held beliefs, this study shows that free trade reduces the welfare of a small country with unemployment unless the free trade price of the importable falls below the autarky equivalent price. This study formulates a disequilibrium trade model with sticky...

Price stabilization is an important policy goal of government intervention in competitive markets. These policies are primarily directed at raising producer income and stabilizing market prices at levels acceptable to consumers and producers (Fox 1956, Turnovsky 1978, Newbery and Stiglitz 1979)....

This paper considers the effects of tariffication-conversion of a variable import levy, widely used in the European Community, into an equivalent ad valorem tariff on trade and welfare. While tough negotiations lie ahead over the exact rates of tariff reduction, contracting countries in...

This paper investigates optimal trade policies for a developing, small open economy that faces international price uncertainly. Trade taxes are used to finance provision of a public good, which enters the utility function of consumers. If demands for private goods are independent of the public...