1 / 4

The Effective Rate of Protection

The Effective Rate of Protection. The Effective Rate of Protection measures the percentage effect of the entire tariff structure on the value added per unit of output in each industry. Tariff Structure Tariff structure refers to the relationship among tariffs in related industries.

paki-parker
Download Presentation

The Effective Rate of Protection

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Effective Rate of Protection The Effective Rate of Protection measures the percentage effect of the entire tariff structure on the value added per unit of output in each industry.

  2. Tariff Structure Tariff structure refers to the relationship among tariffs in related industries. Value Added Value added is the difference between the selling price and the cost of intermediate goods. V = PA - PSa The Effective Rate of Protection

  3. The Effective Rate of Protection ERP = ( V’- V ) / V • ERP = Effective Rate of Protection • V’ = Value Added with tariff • V = Value added with free trade

  4. The Effective Rate of Protection ERP = (tf – ati) / (1 – a) Where tfis the nominal tariff on the imported finished good, a is the value of imported inputs as a share of the value of the final good under free trade, and tiis the tariff on imported inputs used by the domestic producers.

More Related