Local Learning, Trade Policy and Industrial Structure Dynamics

Facundo Albornoz and Paolo Vanin
Authors registered in the RePEc Author Service: Paolo Vanin () and Facundo Albornoz ()

Discussion Papers from Department of Economics, University of Birmingham

Abstract: In a small open economy with heterogeneous firms, in which tariffs determine the mass of active firms, free trade optimality depends positively on the level of firm heterogeneity and negatively on transportation costs. The benefits from temporary protection depend on the level of backwardness: for a given mass of backward firms, the relative gains from protection increase with their quality and decrease with the quality of advanced firms; for given production quality levels, the relative advantage of protection increases with the mass of backward firms.

Keywords: Production network; Learning externalities; Infant industry (search for similar items in EconPapers)
JEL-codes: D51 D62 F12 F13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-int, nep-net and nep-soc
Date: 2005-09
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