The Cost of Protection: Where do we Stand?

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(AER Papers and Proceedings May 2002): The paper focuses on the static costs of protection and argues that the estimates based on the traditional neoclassical model are small because they typically measure the cost of low levels of protection.  The cost of high levels of protection can be very high. Alternatively, in the presence of scale economies, endogenous determination of product variety, X-efficiency effects and Directly Unproductive Profit-seeking activities, even low levels of protection can lead to high costs.  A longer version of the paper is available below under the title "Alternative Approaches to Measuring the Cost of Protection."