Winning essays

“Efficiency and Redistribution in Environmental Policy: An Equilibrium Analysis of Agricultural Supply Chains” by Tomas Dominguez-Iino

The author looks beyond carbon taxes to consider the possibilities for regulating trade-oriented and imperfectly competitive industries that contribute to climate change.

Looking in particular at the South American agricultural sector, he shows that imposing environmental tariffs on agricultural imports from South America is an option that would perform poorly due to “carbon leakage”, whereby emissions reductions achieved by regulated markets are mostly offset by increased trade flows to non-regulated markets. Imposing tariffs would also lead to adverse distributional effects for South American farmers, which would be exacerbated by the market power of the agribusiness firms to which they sell their output. 

In the view of the Selection Panel, this paper takes on a very important and timely set of policy issues. The panel praised its insights and said it was useful in cautioning policymakers about unintended consequences of policy decisions. 

Tomas Dominguez-Iino is from Argentina. He got his Ph.D. from New York University in 2021. He will be a Postdoctoral Researcher, University of Chicago Booth School of Business, in 2021-22. He will then join the Federal Reserve Board as of 2022.

“Learning between Buyers and Sellers along the Global Value Chain” by Swapnika Rachapalli

The author asks whether input suppliers learn how to make downstream products from their buyers and, if so, what the role of international trade is in providing access to better downstream foreign knowledge through buyer-seller interactions.

She uses plant-level data from the Indian manufacturing sector and product-level input/output tables to show that Indian firms benefit from knowledge flows from their foreign buyers to expand downstream and respond to increases in foreign demand. The paper finds that gains from opening up are larger for firms/countries with less technological know-how and which were previously more closed to foreign markets.

In the view of the Panel, the author has identified a very important mechanism by which developing countries can gain from trade with industrialized countries through technology upgrading.

Swapnika Rachapalli is from India. She got her Ph.D. from the University of Toronto, Canada, in 2021. She will be a postdoctoral fellow at Princeton University’s International Economics Section in 2021-22, and as of July 2022 Assistant Professor at the University of British Columbia.

Selection Panel

The Selection Panel comprised Beata Javorcik (Professor of Economics, University of Oxford), Robert Koopman (Director, Economic Research and Statistics Division, WTO), Robert Staiger (Professor of Economics, Dartmouth University), Alberto Trejos (Professor of Economics, INCAE Business School). Roberta Piermartini (Chief of Section, Economic Research and Statistics Division, WTO) coordinated the work of the Selection Panel.