DP5477 Rags in the High Rent District: The Evolution of Quota Rents in Textiles and Clothing

Author(s): Joseph Francois, Julia Wörz
Publication Date: February 2006
Keyword(s): ATC, Gaussian Quadrature, import quotas, MFA, NTB estimation
JEL(s): C15, F13
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=5477

We develop a mixed complementarity programming (MCP) based estimating framework for non-tariff barriers (NTBs) to examine the evolution of market access conditions in the textile and clothing sectors, working with a panel of bilateral trade data on textile and clothing trade, underlying bilateral tariffs, and the country-pair coverage of quotas under the WTO's Agreement on Textiles and Clothing (ATC). Our estimating framework takes advantage of the panel nature of trade data when calculating export tax equivalents while allowing for inequality constraints on the quota premium estimates. We also introduce Gaussian quadrature for estimating goodness of fit for regression-based NTB measures based on residual fitting.