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Trade Policy and Industrial Structure

Author

Listed:
  • Facundo Albornoz
  • Paolo Vanin

Abstract

In a small open economy with heterogeneous firms, in which tariffs determine the mass of active firms, the gains from trade liberalization depend positively on the level of firm vertical heterogeneity and negatively on transportation costs. The benefits from temporary protection depend on the level of backwardness: for a given mass of backward firms, the relative gains from protection increase with their quality and decrease with the quality of advanced firms; for given production quality levels, the relative advantage of protection increases with the mass of backward firms.

Suggested Citation

  • Facundo Albornoz & Paolo Vanin, 2007. "Trade Policy and Industrial Structure," Discussion Papers 05-12, Department of Economics, University of Birmingham.
  • Handle: RePEc:bir:birmec:05-12
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    File URL: ftp://ftp.bham.ac.uk/pub/RePEc/pdf/05-12.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Trade policy; Production network; Learning externalities; Infant Industry;

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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