The Optimal Degree of Reciprocity in Tariff Reduction

Pao-Li Chang ()
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Pao-Li Chang: School of Economics, Singapore Management University

No 19-2020, Economics and Statistics Working Papers from Singapore Management University, School of Economics

Abstract: This paper characterizes the optimal reciprocal trade policy in the environment of Melitz (2003) with firm productivity heterogeneity. With all the conflicting effects of import tariffs on welfare considered, the optimal degree of reciprocity in multilateral tariff reduction is shown to be free trade.

Keywords: Firm Heterogeneity; Reciprocal Trade Policy (search for similar items in EconPapers)
JEL-codes: F12 F13 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2020-08-21
New Economics Papers: this item is included in nep-int and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:ris:smuesw:2020_019

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