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Tariffs and Welfare in an Imperfectly Competitive Overlapping‐Generations Model

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  • Partha Sen

Abstract

The effect of a tariff is analyzed in a two‐sector model in an uncertain‐lifetimes framework. One of the sectors is monopolistically competitive. It is shown that while a tariff leads to a consumption boom and possibly a current‐account surplus, its welfare effects depend on whether the homogeneous good or the differentiated good is exported by the small open economy. Welfare improves if the differentiated good is nontraded but deteriorates if the homogeneous good is nontraded.

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  • Partha Sen, 2001. "Tariffs and Welfare in an Imperfectly Competitive Overlapping‐Generations Model," Review of Development Economics, Wiley Blackwell, vol. 5(2), pages 227-238, June.
    • Handle: RePEc:bla:rdevec:v:5:y:2001:i:2:p:227-238
    DOI: 10.1111/1467-9361.00120
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    Cited by:

    1. Romain Restout, 2008. "Monopolistic Competition and the Dependent Economy Model," EconomiX Working Papers 2008-9, University of Paris Nanterre, EconomiX.

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