Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
962563 | Journal of International Economics | 2013 | 7 Pages |
Abstract
In this paper we present a version of the Melitz (2003) model for the case of a small economy and summarize its key relationships with the aid of a simple figure. We then use this figure to provide an intuitive analysis of the implications of asymmetric changes in trade barriers and show that a decline in import costs always benefits the liberalizing country. This stands in contrast to variants of the Melitz model with a freely traded (outside) sector, such as Demidova (2008) and Melitz and Ottaviano (2008), where the country that reduces importing trade costs experiences a decline in welfare.
Related Topics
Social Sciences and Humanities
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Economics and Econometrics
Authors
Svetlana Demidova, Andrés RodrÃguez-Clare,