A Comprehensive Empirical Analysis of Trade Policy for a Small Country with Monopolistic Competition

To evaluate protectionism, we propose a comparative advantages model based on monopolistic competition with an endogenous markup, which enables the identification of three policy effects: international competition, productive and allocative efficiency, besides a non-cost competition term. Evidence is based on Brazil's import substitution industrialization, and the foreign economy is a set of (integrated) developed countries, which amplifies both the accuracy to comparative advantages and the access to fixed costs (economies of scale). Only the period under protection is considered, so that some comparative static analyzes draw on counterfactuals. See above See above