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| Author: | Facchini, G. Willmann, G. |
| Title: | The gains from duty free zones |
| Journal: | Journal of International Economics
1999 : DEC, VOL. 49:2, p. 403-412 |
| Index terms: | ECONOMICS FREE TRADE COMPARATIVE ADVANTAGE |
| Language: | eng |
| Abstract: | 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 Normal (1980), the authors 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 accompnaying free trade. |
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