Unilateral Trade Liberalization in the Melitz Model: A Note

Gabriel Felbermayr and Benjamin Jung

Economics Bulletin, 2012, vol. 32, issue 2, 1724-1730

Abstract: In the two-country Melitz (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.

Keywords: Monopolistic Competition; Heterogeneous Firms; International Trade; Trade Policy (search for similar items in EconPapers)
JEL-codes: F1 R1 (search for similar items in EconPapers)
Date: 2012-06-14
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Citations: View citations in EconPapers (11)

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Working Paper: Unilateral trade liberalization in the melitz model: A note (2012)
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