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Local Learning, Trade Policy and Industrial Structure Dynamics

  • Facundo Albornoz and Paolo Vanin

In a small open economy with heterogeneous firms, in which tariffs determine the mass of active firms, free trade optimality depends positively on the level of firm 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.

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File URL: ftp://ftp.bham.ac.uk/pub/RePEc/pdf/AV05_WP.pdf
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Paper provided by Department of Economics, University of Birmingham in its series Discussion Papers with number 05-12.

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Length: 53 pages
Date of creation: Sep 2005
Date of revision:
Handle: RePEc:bir:birmec:05-12
Contact details of provider: Postal: Edgbaston, Birmingham, B15 2TT
Web page: http://www.economics.bham.ac.uk

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  9. Melitz, Marc J., 2005. "When and how should infant industries be protected?," Journal of International Economics, Elsevier, vol. 66(1), pages 177-196, May.
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  11. Clemhout, S & Wan, H Y, Jr, 1970. "Learning-by-Doing and Infant Industry Protection," Review of Economic Studies, Wiley Blackwell, vol. 37(1), pages 33-56, January.
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  15. Jens Matthias Arnold & Katrin Hussinger, 2005. "Export Behavior and Firm Productivity in German Manufacturing: A Firm-Level Analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 219-243, July.
  16. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-19, December.
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