Unilateral Trade Liberalization in the Melitz Model: A Note

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URI: http://nbn-resolving.de/urn:nbn:de:bsz:21-opus-60796
Dokumentart: ResearchPaper
Date: 2012
Source: University of Tübingen Working Papers in Economics and Finance ; 30
Language: English
Faculty: 6 Wirtschafts- und Sozialwissenschaftliche Fakultät
Department: Wirtschaftswissenschaften
DDC Classifikation: 330 - Economics
Keywords: Außenhandel
Other Keywords:
MonopolisticCompetition , Heterogeneous Firms , International Trade , Trade Policy
License: Publishing license excluding print on demand
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In the two-countryMelitz (2003) model, unilateral trade liberalization is often cast as a reduction of iceberg transportation costs and wages are determined by a linear outside sector. We show that welfare results reverse when wages adjust and trade frictions are revenue-generating tariffs.

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