Measurement of Tariff Elasticities

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Abstract
The recent Kennedy Round has focused renewed attention on the effects of tariff reductions on the quantity demanded of a country's imports. This study is primarily devoted to the comparative statics effects of such tariff reductions on the quantity demanded of electrical appliances imported from the United States to Canada. An empirical approach is used with emphasis given to the following five representative commodities: electrical refrigerators, automatic washing machines, electric ranges, television sets, and automobile storage batteries. Under the Kennedy Round, Canada agreed to lower tariffs on the foregoing commodities by a substantial amount 1 1. The percentage changes in the tariff rates on these commodities were 13.33, 11.49, 11.49, 28.57, and 13.33 respectively. Source: Canada Tariff Concessions Agreed in the Kennedy Round Negotiations under the General Agreement on Tariffs and Trade, Department of Finance, Ottawa, June, 1967. View all notes . Since there had been very few changes in the tariff on these commodities prior to 1967, no attempt is made to measure tariff elasticities directly. An indirect approach is taken instead. The tariff elasticities of import price, import demand and import expenditures are derived from the price elasticities of import demand and supply. Thus, the first problem is to derive a procedure for measuring the price elasticities of import demand and supply.

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