In this paper the optimal tariff policy in the context of a very simple model of two consumption goods and two inputs are analyzed. One of the inputs is completely mobile between sectors and the other is a quasi - fixed factor, the latter being considered fixed in the short run and completely mobile in the long run. In the first section a partial approach is carried out, with intertemporal maximization of income at international prices. In the second section a more general approach is pursued with intertemporal utility maximization by agents. We start from a very high tariff level, reaching in both models the same results: the optimal tariff policy is at the beginning a sharp decrease in the tariff level, reaching a point where subsidies to imports should be paid. These subsidies are gradually reduced until the optimal zero tariff is reached.
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Article provided by Instituto de Economía. Pontificia Universidad Católica de Chile. in its journal Cuadernos de Economía.
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