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Quotas, spillovers, and the transfer paradox in an economy with tourism

Chao, Chi-Chur, Hazari, Bharat R. and Yu, Eden S. H. 2010, Quotas, spillovers, and the transfer paradox in an economy with tourism, Review of international economics, vol. 18, no. 2, pp. 243-249, doi: 10.1111/j.1467-9396.2010.00860.x.

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Title Quotas, spillovers, and the transfer paradox in an economy with tourism
Author(s) Chao, Chi-Chur
Hazari, Bharat R.
Yu, Eden S. H.
Journal name Review of international economics
Volume number 18
Issue number 2
Start page 243
End page 249
Total pages 7
Publisher Wiley-Blackwell
Place of publication Chichester, England
Publication date 2010-05
ISSN 0965-7576
Keyword(s) benchmarking
free trade
goods exchange
import
spillover effect
terms of trade
tourism
welfare economics
Summary This paper examines the welfare implications of quotas for an economy that is small in terms of traditionally traded goods and has monopoly power over the trade of goods consumed by tourists. Inbound tourism converts local nontraded goods into tradable goods, creating a tourism terms-of-trade effect for the touristreceiving economy. Through this effect, quotas result in a spillover to the nontraded sector. Hence, in the presence of tourism, the traditional free-trade prescription for the small open economy is no longer valid. This lends support to the setting of import quotas. Using the optimal quota as a benchmark, we further examine the welfare effect of tied aid. If tied aid brings about an excessive supply of importable goods, then the transfer paradox of the immiserization of the tourist- receiving economy may occur.
Language eng
DOI 10.1111/j.1467-9396.2010.00860.x
Field of Research 159999 Commerce, Management, Tourism and Services not elsewhere classified
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2010, Wiley-Blackwell
Persistent URL http://hdl.handle.net/10536/DRO/DU:30066393

Document type: Journal Article
Collections: Faculty of Business and Law
Deakin Graduate School of Business
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