Publication Type
Working Paper
Version
publishedVersion
Publication Date
2-2010
Abstract
This article clari.es the roles played by trade policy, in contrast with iceberg transport cost, in the popular setting of Melitz (2003), and characterizes the optimal reciprocal trade policy in such a setting. I show that import tariffs and iceberg transport cost are not equivalent in the strength of their trade-restricting e¤ects and their welfare implications. With all the con.icting effectsof import tari¤s on welfare considered, the optimal degree of reciprocity in multilateral tari¤ reduction turns out to be free trade.
Keywords
Firm Heterogeneity, Reciprocal Trade Policy.
Discipline
Economic Policy | Finance | International Business
Research Areas
International Economics
Citation
CHANG, Pao Li.
The Optimal Degree of Reciprocity in Tariff Reduction. (2010).
Available at: https://ink.library.smu.edu.sg/soe_research/1162
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.