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The Optimal Degree of Reciprocity in Tariff Reduction

Author

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  • Chang, Pao-Li

    (School of Economics, Singapore Management University)

Abstract

This paper characterizes the optimal reciprocal trade policy in the environment of Melitz (2003) with firm productivity heterogeneity. With all the conflicting effects of import tariffs on welfare considered, the optimal degree of reciprocity in multilateral tariff reduction is shown to be free trade.

Suggested Citation

  • Chang, Pao-Li, 2020. "The Optimal Degree of Reciprocity in Tariff Reduction," Economics and Statistics Working Papers 19-2020, Singapore Management University, School of Economics.
  • Handle: RePEc:ris:smuesw:2020_019
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    File URL: https://ink.library.smu.edu.sg/soe_research/2399/
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    More about this item

    Keywords

    Firm Heterogeneity; Reciprocal Trade Policy;

    JEL classification:

    • 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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