Fukushima, Marcelo and Kikuchi, Toru (2008): A Simple Model of Trade with Heterogeneous Firms and Trade Policy.
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This paper builds a Ricardian-Chamberlinian two-country model with heterogeneous firms in a monopolistically competitive sector in which every new entrant faces increasing fixed costs of production. There are efficiency gaps between countries in marginal and fixed costs and a country unilaterally imposes an import tariff. It is shown that an increase in tariff increases the number of firms of the tariff imposing country while decreases the number of firms of the tariff-imposed country, possibly reverting the position of net exporter of varieties. A tariff is detrimental to the tariff-imposed country. A small tariff may be beneficial to the tariff-imposing country.
|Item Type:||MPRA Paper|
|Original Title:||A Simple Model of Trade with Heterogeneous Firms and Trade Policy|
|Subjects:||F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation|
|Depositing User:||Toru Kikuchi|
|Date Deposited:||16. Jul 2008 00:28|
|Last Modified:||18. Feb 2013 15:28|
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