Studies aiming at investigating the trade effects of NTMs provide useful results. However, they offer an incomplete understanding of the actual effects of these NTMs on all economic agents concerned – not only producers but also consumers, importers, and governments. Some NTMs may restrict trade but improve welfare if they address market failures. It is therefore important to gain an insight into the impact of NTMs on the well-being of all these economic agents. The welfare impact of NTMs is also of crucial importance for developing countries. It is one thing for them to complain about the trade-reducing effect of NTMs if these NTMs also reduce welfare in the importing country. But their approach to NTMs would have to be very different if it were shown that these NTMs actually raise welfare in the importing country, and possibly by more than they lower it in the developing exporting country. This chapter presents an extension of the framework discussed in Chapter 3 able to provide insights in terms of welfare effects. It then reviews some major contributions to this strand of the literature.

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