Relative efficiency of specific and ad-valorem tariffs in a model of monopolistic competition

► We compare the relative efficiency of ad-valorem and specific tariff regimes. ► Homogenous firms compete in a monopolistically competitive market. ► A quadratic utility function that allows for variable mark-up represents preferences. ► Superiority of a specific tariff in monopolistically competitive markets is overturned. ► An ad-valorem tariff is superior when consumers' love for variety is low.