A general equilibrium estimation of the effects of reductions in tariffs and quantitative restrictions in Turkey in 1978

Abstract

This paper presents general equilibrium estimates of the effects of removing quantitative restrictions and reducing tariff protection across the board by 50 percent for Turkey in 1978. The paper presents a number of extensions over previous estimates of the gains from reducing foreign trade restrictions. The most important extensions include a correct modelling of quantitative restrictions in general equilibrium and an approach to the endogenous determination of rent-seeking activity levels in the presence of quantitative restrictions. The results suggest that substantial costs in terms of foregone GDP resulted from import quotas in the presence of rent-seeking. Finally, for reasons explained in the paper, the additional gain from a further 50 percent across the board reduction in tariff barriers would have been negligible.

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