DP716 A Primer on the MFA Maze
| Author(s): | Jaime de Melo, Riccardo Faini |
| Publication Date: | September 1992 |
| Keyword(s): | Allocative Efficiency, Multi-Fiber Agreements, Quotas |
| JEL(s): | F13 |
| Programme Areas: | International Trade and Regional Economics |
| Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=716 |
The paper identifies the potential sources of allocative inefficiency generated by the Multi-Fiber Agreements (MFA) and examines the evidence for such inefficiencies. Five sources of inefficiency are identified relating to inefficient allocations across countries, across consumers, and among firms within constrained countries. Evidence is first provided from trends in import shares for aggregate categories of textiles and clothing before and during the MFA. Second, evidence is provided from a detailed examination of quota utilization rates and price differentials among EC importing countries.