Why Special Economic Zones? Using Trade Policy to Discriminate across Importers
AbstractTariffs are generally assumed to depend on the product, not the identity of the importer. However, special economic zones are a common, economically important policy used worldwide to lower tariffs on selected goods for selected manufacturers. I show this is motivated by policymakers' desire to discriminate across buyers when a tax is intended to raise prices for sellers, through a mechanism distinct from existing theories of optimal taxation. Using a new dataset compiled from public records and exogenous changes in imports of intermediate goods, I find the form, composition, and size of US zones are consistent with the theory.
CitationGrant, Matthew. 2020. "Why Special Economic Zones? Using Trade Policy to Discriminate across Importers." American Economic Review, 110 (5): 1540-71. DOI: 10.1257/aer.20180384
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- L60 Industry Studies: Manufacturing: General
- R32 Other Spatial Production and Pricing Analysis