The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Effective Protection

  • W. M. Corden
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_106

Abstract

The effective rate of protection is the rate of protection provided to the value added in the production of a product. Let the effective price be defined as the domestic price of a unit of value added. Then the effective rate of protection (henceforth, ERP) is the proportional increase in the effective price made possible by tariffs and other measures. It is to be contrasted with the nominal tariff and (more generally) nominal rate of protection, which refers to the proportional increase in the nominal price. If the only policy instruments are tariffs, the ERP depends not only on the nominal tariff on the commodity concerned but also on the tariffs on the inputs and on the input coefficients.

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • W. M. Corden
    • 1
  1. 1.