Buffer stocks are better stabilizers than quotas
Abstract
Michael Pelcovits (1979, p. 307) recently showed that with an unstable foreign excess
supply curve, either a fixed quota or a buffer stock program with a fixed tariff can
be used to stabilize domestic price at a given level, and both policies 'will have
the same effect on social welfare [so...t]he choice between [the two...] must then
be made on the basis of administrative cost and feasibility'. However, he reached
his conclusion by ranking the two policies on the basis of domestic welfare, and in
this note we demonstrate with his same model that on the basis of foreign welfare
the buffer stock is better than the quota. Thus, world welfre is higher under the
buffer stock than under the quota. © 1981.
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https://hdl.handle.net/10161/1957Published Version (Please cite this version)
10.1016/0022-1996(81)90047-7Publication Info
Tower, E (1981). Buffer stocks are better stabilizers than quotas. Journal of International Economics, 11(1). pp. 113-115. 10.1016/0022-1996(81)90047-7. Retrieved from https://hdl.handle.net/10161/1957.This is constructed from limited available data and may be imprecise. To cite this
article, please review & use the official citation provided by the journal.
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Show full item recordScholars@Duke
Edward Tower
Professor Emeritus of Economics
Professor Tower specializes in finance, computable general equilibrium modeling, macroeconomics,
development economics, microeconomics, and managerial economics. He conducts a majority
of his research within the study of trade and development, exploring a variety of
variables from tariffs, quotas, and time zone arbitrage, to equities, mutual funds,
and index mutual funds. Since he began publishing his work in 1965, he has contributed
over 130 articles to leading academic journals and has had s

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