Unilateral trade liberalization in the Melitz model: A note

Gabriel Felbermayr and Benjamin Jung

No 30, University of Tübingen Working Papers in Business and Economics from University of Tuebingen, Faculty of Economics and Social Sciences, School of Business and 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.

Keywords: monopolistic competition; heterogeneous firms; international trade; trade policy (search for similar items in EconPapers)
JEL-codes: F12 R12 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (12)

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Journal Article: Unilateral Trade Liberalization in the Melitz Model: A Note (2012)
Working Paper: Unilateral trade liberalization in the melitz model: A note (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tuewef:30

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