Unilateral trade liberalization in the melitz model: A note

Gabriel Felbermayr and Benjamin Jung

Munich Reprints in Economics from University of Munich, Department of Economics

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.

Date: 2012
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Published in Economics Bulletin 2 32(2012): pp. 1724-1730

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