Welfare and market access effects of piecemeal tariff reform

We study the link between import volume and welfare due to liberalization. We confine our attention to the small country case and to unilateral tariff reductions. Our results indicate that increased import volume associated with tariff reductions is neither necessary nor sufficient for welfare improvement to occur. We show that in general both import value and welfare cannot fall. Moreover, if the excess demand for exported goods does not respond to changes in the prices of imported goods, the value of imports and welfare must move in opposite directions. (C) 2000 Elsevier Science B.V. All rights reserved.